- Date : 03/07/2020
- Read: 6 mins
Know the benefits of the Atal Pension Yojana and who can go for it.
Atal Pension Yojana (APY), is a pension scheme initiated by the Government of India, largely for the benefit of workers employed in the unorganised sector.
People employed in the organised sector can easily arrange to direct a portion of their earnings to a pension scheme. Besides, they also have access to all the information that can help them make an informed decision in this regard.
However, investing in a pension scheme may not be so easy for (say) a driver, a house help, or a sanitation worker. For people like these, APY can be a golden opportunity to financially secure their long-term future.
APY is a revamped version of the Swavalamban Yojana and was launched in 2015. Targeting a category of workers who mostly work to survive, APY intends to bring awareness about financial planning and secure their future.
Given that around 90% of India’s workforce works in the informal sector and only 20% of the country’s workforce have pension plans, as per PFRDA data, APY looks to improve things for the massive workforce falling under the unorganised sector.
Related: Retirement planning for pros: National Pension Scheme
As off May 2022, Uttar Pradesh has the highest number of subscribers under Atal Pension Yojana followed by Bihar, West Bengal, Maharashtra, Madhya Pradesh and Andhra Pradesh.
Who can subscribe to Atal Pension Yojana?
Anyone can avail of the benefits of Atal Pension Yojana, provided they fulfil certain requirements. The applicant should:
- Be a citizen of India
- Be aged between 18 and 40
- Contribute to APY for a minimum of 20 years
- Possess an Aadhaar-linked bank account
- Have a valid mobile number
What is the eligibility criteria for Atal Pension Yojana?
Atal Pension Yojana is open to people who are not members of any other statutory social security scheme. Those who were availing themselves of the benefits of Swavalamban Yojana have been automatically migrated to APY following the revamp.
How to apply for Atal Pension Yojana?
APY is intended to be made popular among ordinary citizens, so its enrolment process is kept as simple as possible.
- Availability – If the person doesn’t have a bank account, they can approach the nearest bank branch/post office and open a savings bank account. If the person has a savings bank account, they have to visit the branch. Then fill in the APY registration form.
- Online presence – A person familiar with the Internet can get enrolled for APY through the savings account directly by using Internet banking. However, in case the bank doesn’t offer the facility, one has to visit the branch in person.
- Contribution – The desired premium can be selected and auto-debit facility arranged through Internet banking. The premium continues to be debited from enrolment till the subscriber attains 60 years of age.
- APY forms – The form can be downloaded from the Scheme’s official website and can be obtained from bank branches as well. The forms have been made available in English, Hindi, Bangla, Gujarati, Kannada, Marathi, Odia, Tamil and Telugu.
- Form submission – Once the form is filled up it must be submitted to the bank along with a valid mobile number and a copy of the Aadhaar Card Once the application is approved, a confirmatory message is sent to the registered mobile number.
What is the monthly contribution for Atal Pension Yojana?
The monthly contribution will depend on the age of the subscriber and the monthly pension desired. The lower the age of the applicant, the lower the monthly premium; the higher the desired fixed monthly pension, the higher the monthly premium.
As an example, if someone joins the scheme at the age of 20 and expects a monthly pension of Rs 1000, the premium would be Rs 50, whereas for the same pension a 40-year-old new joiner would have to pay a premium of Rs 291.
Related: What is National Pension System and how it works?
What are the benefits of Atal Pension Yojana?
- APY aims to benefit senior citizens by providing them with an assured income during their old age.
- This and similar schemes help to build a culture of investment and savings among the lower middle class and poorer sections of the society, which generally end up spending their entire wages without any contribution towards retirement planning.
- APY will seek to address the financial security of nearly 90% of India’s labour force that mainly consists of workers in the unorganised sector.
- The Indian government had proposed to co-contribute 50% of the user’s contribution or Rs 1000 (whichever is less) towards the scheme for the first 5 years. However, this facility was only for those subscribers who joined the scheme before 31st December 2015, was not part of any other similar scheme, and were not eligible to pay income tax.
- APY is very easy to sign up for. Interested subscribers only need to fulfill basic requirements such as having a savings bank account and a phone number.
- The beneficiaries of any other social security scheme (such as Employees’ Provident Fund) can also enroll for APY.
- Due to the administration of the Pension Fund Regulatory and Development Authority (PFRDA) and the backing of the Government, APY assures robust and safe support.
- Periodic contributions can be made by arranging auto-debit from one’s bank account. The subscriber only needs to ensure there’s enough money in the account.
- The premium can be changed by visiting the bank and asking the concerned official to make the necessary changes.
- APY has an early withdrawal option in case of terminal illness or death; the subscriber (or their nominee) will receive the entire amount back.
- Contributions to APY are eligible for tax exemption under Section 80CCD.
Related: As an NPS subscriber, you may now be able to invest more in equities. What does this mean?
To sum up, Atal Pension Yojana is a simple yet seemingly effective pension scheme that is tailor-made to suit the needs of the poorer sections of society. It offers features like linkage with one’s savings bank account, minimal eligibility criteria, affordable range of premiums, and ease of use and understanding.
APY also featured a contribution from the government, providing the assurance a finance scheme needs. Going forward, it is expected to better address the financial needs and concerns of low-income senior citizens.
Atal Pension Yojana (APY), is a pension scheme initiated by the Government of India, largely for the benefit of workers employed in the unorganised sector.
People employed in the organised sector can easily arrange to direct a portion of their earnings to a pension scheme. Besides, they also have access to all the information that can help them make an informed decision in this regard.
However, investing in a pension scheme may not be so easy for (say) a driver, a house help, or a sanitation worker. For people like these, APY can be a golden opportunity to financially secure their long-term future.
APY is a revamped version of the Swavalamban Yojana and was launched in 2015. Targeting a category of workers who mostly work to survive, APY intends to bring awareness about financial planning and secure their future.
Given that around 90% of India’s workforce works in the informal sector and only 20% of the country’s workforce have pension plans, as per PFRDA data, APY looks to improve things for the massive workforce falling under the unorganised sector.
Related: Retirement planning for pros: National Pension Scheme
As off May 2022, Uttar Pradesh has the highest number of subscribers under Atal Pension Yojana followed by Bihar, West Bengal, Maharashtra, Madhya Pradesh and Andhra Pradesh.
Who can subscribe to Atal Pension Yojana?
Anyone can avail of the benefits of Atal Pension Yojana, provided they fulfil certain requirements. The applicant should:
- Be a citizen of India
- Be aged between 18 and 40
- Contribute to APY for a minimum of 20 years
- Possess an Aadhaar-linked bank account
- Have a valid mobile number
What is the eligibility criteria for Atal Pension Yojana?
Atal Pension Yojana is open to people who are not members of any other statutory social security scheme. Those who were availing themselves of the benefits of Swavalamban Yojana have been automatically migrated to APY following the revamp.
How to apply for Atal Pension Yojana?
APY is intended to be made popular among ordinary citizens, so its enrolment process is kept as simple as possible.
- Availability – If the person doesn’t have a bank account, they can approach the nearest bank branch/post office and open a savings bank account. If the person has a savings bank account, they have to visit the branch. Then fill in the APY registration form.
- Online presence – A person familiar with the Internet can get enrolled for APY through the savings account directly by using Internet banking. However, in case the bank doesn’t offer the facility, one has to visit the branch in person.
- Contribution – The desired premium can be selected and auto-debit facility arranged through Internet banking. The premium continues to be debited from enrolment till the subscriber attains 60 years of age.
- APY forms – The form can be downloaded from the Scheme’s official website and can be obtained from bank branches as well. The forms have been made available in English, Hindi, Bangla, Gujarati, Kannada, Marathi, Odia, Tamil and Telugu.
- Form submission – Once the form is filled up it must be submitted to the bank along with a valid mobile number and a copy of the Aadhaar Card Once the application is approved, a confirmatory message is sent to the registered mobile number.
What is the monthly contribution for Atal Pension Yojana?
The monthly contribution will depend on the age of the subscriber and the monthly pension desired. The lower the age of the applicant, the lower the monthly premium; the higher the desired fixed monthly pension, the higher the monthly premium.
As an example, if someone joins the scheme at the age of 20 and expects a monthly pension of Rs 1000, the premium would be Rs 50, whereas for the same pension a 40-year-old new joiner would have to pay a premium of Rs 291.
Related: What is National Pension System and how it works?
What are the benefits of Atal Pension Yojana?
- APY aims to benefit senior citizens by providing them with an assured income during their old age.
- This and similar schemes help to build a culture of investment and savings among the lower middle class and poorer sections of the society, which generally end up spending their entire wages without any contribution towards retirement planning.
- APY will seek to address the financial security of nearly 90% of India’s labour force that mainly consists of workers in the unorganised sector.
- The Indian government had proposed to co-contribute 50% of the user’s contribution or Rs 1000 (whichever is less) towards the scheme for the first 5 years. However, this facility was only for those subscribers who joined the scheme before 31st December 2015, was not part of any other similar scheme, and were not eligible to pay income tax.
- APY is very easy to sign up for. Interested subscribers only need to fulfill basic requirements such as having a savings bank account and a phone number.
- The beneficiaries of any other social security scheme (such as Employees’ Provident Fund) can also enroll for APY.
- Due to the administration of the Pension Fund Regulatory and Development Authority (PFRDA) and the backing of the Government, APY assures robust and safe support.
- Periodic contributions can be made by arranging auto-debit from one’s bank account. The subscriber only needs to ensure there’s enough money in the account.
- The premium can be changed by visiting the bank and asking the concerned official to make the necessary changes.
- APY has an early withdrawal option in case of terminal illness or death; the subscriber (or their nominee) will receive the entire amount back.
- Contributions to APY are eligible for tax exemption under Section 80CCD.
Related: As an NPS subscriber, you may now be able to invest more in equities. What does this mean?
To sum up, Atal Pension Yojana is a simple yet seemingly effective pension scheme that is tailor-made to suit the needs of the poorer sections of society. It offers features like linkage with one’s savings bank account, minimal eligibility criteria, affordable range of premiums, and ease of use and understanding.
APY also featured a contribution from the government, providing the assurance a finance scheme needs. Going forward, it is expected to better address the financial needs and concerns of low-income senior citizens.
