Atal Pension Yojana in India

What is a Pension?

A Pension provides a monthly income to the people during their retirement years. It helps the retired individuals in earning a regular income while being financially stable. A better pension plan helps individuals in the following ways:  

• A regular potential income in the old age days  
• Prepare for a rise in the cost of living and increased longevity.  
• Dignified life in old age due to less financial dependence.

What is an Atal Pension Yojana?

Atal Pension Yojana is an initiative of the Government of India to include the unorganized sector under the social security scheme. This voluntary pension scheme was launched in 2015 and is regulated by the Pension Funds Regulatory Authority of India (PFRDA). The minimum age of joining is 18, and the maximum age of joining is 40. Under this scheme, the contribution period should be a minimum of 20 years, and investors have to make contributions until they turn 60. They can receive a guaranteed pension per month at the age of 60. The fixed monthly pension is in the range of INR 1,000 – INR 5,000 based on the contributions made.

The contributions will be lower if the investor joins the scheme early. All individuals are eligible to invest in this. However, the focus is on the unorganized sector. Individuals can choose the fixed pension that they want to receive post-retirement, and the contribution is dependent on that. Subscribers can increase or decrease the pension amount. However, this facility is available only once a year in April.

In case the subscriber default on a payment, they have to pay the penalty. The penalty ranges from INR 1 – INR 10 based on the contribution. If the subscriber defaults for six months, the account will be frozen, after 12 months the account will be deactivated, and after 24 months the account will be closed. Lastly, investors can avail of tax benefits up to INR 1.5 lakhs under Section 80CCD (1) and up to INR 50,000 under Section 80CCD (1B).

Features of Atal Pension Yojana

Following are the features of Atal Pension Yojana:

Minimum Investment Amount

The minimum investment amount for Atal Pension Yojana differs on the basis of the age of the investor and pension plan. For example, if a subscriber whose age is 25 years wants a monthly pension of INR 3000 post-retirement, then the monthly contribution they have to make now is INR 347.

Maximum Investment Amount

The maximum investment also differs on the basis of the investor’s age and the pension plan they choose.

Tenure

The tenure of an investment is the duration for which the investors have to make a contribution to the scheme. It depends on when the investor starts the APY scheme. For example, if an individual is 45 years old and the maturity tenure for them is 15 years. Similarly, if an individual is 30 years, the maturity tenure for them is 30 years.

Frequency of Contribution

Investors can choose the frequency of their contributions. It can be monthly or quarterly or half-yearly.

Auto Debit Option

APY offers an auto-debit option for monthly contributions. One can link their bank account and have their monthly contributions auto debited. Also, one must ensure that the bank account has a sufficient balance to avoid any penalties.

Age of Pension

With the Atal Pension Yojana, one can start receiving their pension when they turn 60 years old.

Pension Amount

Investors are eligible to get a guaranteed pension amount from their Atal Pension Yojana deposits. The fixed pension amount can be INR 1,000, INR 2,000, INR 3,000, INR 4,000, and INR 5,000 that the investor wishes to earn post-retirement.

Premature Withdrawal

Atal Pension Yojana does not allow premature withdrawals. However, if the investor dies or suffers from a terminal illness, they can prematurely withdraw their investment.

Pension for Spouse

The account holder’s spouse can claim for pension in the event of their death. The nominee will receive the benefits of the Atal Pension Scheme as well.

Tax Exemption

Contributions towards Atal Pension Yojana qualify for tax exemption under Section 80CCD of the Income Tax Act, 1961. As per Section 80CCD (1). Moreover, the maximum exemption is 10% of the individual’s gross total income (limit of INR 1,50,000). Furthermore, an additional exemption for INR 50,000 is available under Section 80CCD (1B).

What are the benefits of joining the APY scheme?

Following are the benefits of the Atal Pension Yojana account:

• Source of income during old age: The Atal Pension Scheme provides a steady income source to the depositors after they reach the age of 60. Therefore, one can meet their basic financial requirements with the pension amount.
• Pension Amount: Once every year, the depositor can increase or decrease their pension amount.
• Government Scheme: The APY scheme is a government-backed scheme, and hence has no risk of loss. The depositor is assured of pension. Atal Pension Yojana scheme was launched in 2015 and is regulated by the Pension Funds Regulatory Authority of India (PFRDA).
• Unorganized Sector: The main aim of this pension scheme was to tap the unorganized sector and provide a regular source of income for them during later years.
• Nomination Facility: The pension account allows the depositor to choose and nominate a beneficiary. In case of the death of the APY account holder, the nominee will receive the benefits of the pension account.
• Tax Benefit: The contributions to APY are eligible for tax exemption under Section 80CCD of the Income Tax Act, 1961.

Who should invest in the Atal Pension Yojana?

To open the Atal Pension Yojana account, one should meet the following eligibility criteria:

• Should be a Citizen of India
• Age limit: The entry age is 18 years. The maximum entry age is 40 years.
• The contribution period should be a minimum of 20 years.
• Moreover, must have an Aadhaar Number and a mobile number
• Should have a valid bank account.
• Also, individuals under the Swavalamban Yojana will automatically be migrated under the Atal Pension Yojana scheme.

How to invest in the Atal Pension Yojana?

All nationalized banks offer APY schemes. Therefore, one can open an APY account by visiting the nearest branch. The following steps shall help one to invest in Atal Pension Yojana:

• Completely fill and submit the APY registration form at the nearest bank. The APY forms are available at the bank and also online. Furthermore, the forms are available in multiple languages, such as English, Hindi, Telugu, Tamil, Kannada, Bangla, Gujarati, Marathi, and Odia.
• Provide a mobile number, bank account number, and Aadhaar number.
• Submit a photocopy of the Aadhaar card.
• The first contribution (investment amount) will be deducted from the bank account that is linked at the time of account opening.
• The bank shall issue an acknowledgment number or PRAN number.
• All subsequent monthly contributions shall be auto-debited from the bank account.
• Once the application is approved, a confirmation message is sent to the mobile number.

PRAN, Transaction Statements, and Contribution Under APY

1. You can view and print your transaction statement and PRAN Card by visiting the NSDL website. Visit the website and go to ‘Home’, then click on the option of ‘Atal Pension Yojana. Now select ‘APY e-PRAN/Transaction statement view’.
2. You can request for issuance of the Physical PRAN card by paying the applicable fee. Visit the NSDL website to apply online.
3. The subscriber will receive the physical transaction statement once in a financial year to your registered address. This is the address you had provided at the time of enrolling for Atal Pension Yojana.  
4. Regarding any query related to APY account/ contribution, you must enquire to the APY-SP branch or through CGMS.  
5. You can make a contribution online by logging in to your account. The CRA-NSDLwill communicate the status of contributions by sending periodic SMS alerts on your registered mobile number.

Upgrade or Downgrade APY Contribution Amount 

1. The option to upgrade/ downgrade the pension amount is available once in a financial year.  
2. The feature enables you to check the differential amount to be deposited/ to be received back as per the new guaranteed pension amount chosen. 
3. In the case of an upgrade of the pension amount, you need to make a higher deposit to your APY account. If you downgrade the pension amount then you will receive a return of the additional contributions made earlier.
4. The switching facility is available anytime once a year. For this facility, you need to fill the APY Subscriber Modification Form. APY Subscriber Modification Form is available at the NDSL website. You must submit the form to the APY-SP branch. 

 Closure of the APY Account

Voluntary Closure

1. To close the APY account you must submit an application in Form Account Closure Form (Voluntary Exit). Additionally, submit other relevant documents mentioned in the form along with a signed form to the concerned APY-SP branch. 
2. To download the Form visit the NSDL website and go to Atal Pension Yojana. Select the option of Forms and click on Withdrawal Form. Here you need to select and download the Voluntary exit APY withdrawal form. Further, you can visit the nearest APY-SP branch and submit offline. 
3. Ensure that the bank account linked with your APY account is active. You will receive the investment and maturity value in the APY linked savings bank account on a premature exit. 

Closure Due To Death of The Account Holder

1. On the death of the account holder, the nominee or the legal heir can claim the APY pension and investment amount. The claimant must submit the form “APY Closure Form (Death)”. The claimant must submit the form along with a copy of the death certificate to the APY-SP branch. 
2. You can either download the form online or visit the nearest APY-SP Branch.

On the death of the APY account subscriber before 60 years

1. The spouse has the option to continue the contribution in the APY account of the subscriber.
2. He/ she can maintain the account in their own name for the remaining vesting time. Such remaining vesting time is the period for which the original subscriber would have attained 60 years of age.
3. In case the spouse does not wish to continue the account then he/ she will receive the accumulated pension wealth along with the net actual interest earned on the contributions. However,  the refund will be after deducting the account maintenance charges and fee, if any.

On death of the APY account subscriber after 60 years

1. On the death of the APY account subscriber after 60 years of age. The monthly guaranteed pension shall be payable to the spouse of the subscriber. 
2. In case of the absence or death of the spouse, the accumulated pension wealth/corpus shall be payable to the nominee of the subscriber. 
3. The nominee will be the person as per the pension plan and an individual other than the spouse of the subscriber.

Atal Pension Yojana Contribution Chart

The contribution amount is calculated based on the investor’s age and the pension amount selected. Investors can choose to contribute on a monthly basis. They can also invest in quarterly and half-yearly intervals. The following table shows the monthly contributions that investors have to make at different ages for different pension amounts.

		Pension of INR 1,000	Pension of INR 2,000	Pension of INR 3,000	Pension of INR 4,000	Pension of INR 5,000
	Return to the nominee	INR 1.7 lakhs	INR 3.4 lakhs	INR 5.1 lakhs	INR 6.8 lakhs	INR 8.5 lakhs
Age of Entry	Investment Tenure	Monthly contribution (INR)	Monthly contribution (INR)	Monthly contribution (INR)	Monthly contribution (INR)	Monthly contribution (INR)
18	42	42	84	126	168	210
19	41	46	92	138	183	228
20	40	50	100	150	198	248
21	39	54	108	162	215	269
22	38	59	117	177	234	292
23	37	64	127	192	254	318
24	36	70	139	208	277	346
25	35	76	151	226	301	376
26	34	82	164	246	327	409
27	33	90	178	268	356	446
28	32	97	194	292	388	485
29	31	106	212	318	423	529
30	30	116	231	347	462	577
31	29	126	252	379	504	630
32	28	138	276	414	551	689
33	27	151	302	453	602	752
34	26	165	330	495	659	824
35	25	181	362	543	722	902
36	24	198	396	594	792	990
37	23	219	436	654	870	1087
38	22	240	480	720	957	1196
39	21	264	520	792	1054	1318

Is an Aadhaar Card compulsory for joining the Atal Pension Yojana? 

Yes, it is mandatory to present the Aadhaar number to join Atal Pension Yojana (APY). The APY is included under Section 7 of the Aadhaar Act. As per the provisions of the Act, ‘any individual who is eligible to receive such benefits under the APY will have to furnish proof of possession of Aadhaar number or undergo enrolment under Aadhaar authentication’.

Can an employee of Central/ State Government or Public Sector Undertaking subscribe to APY?

Yes, an employee of Central/State Government or Public Sector Undertaking can subscribe to APY. The eligibility criteria for APY is straightforward. Any Indian citizen within the age group of 18 – 40 years, can join APY Scheme. The individual may or may not be an employee of Central/ State Government. 

Frequently Asked Questions

Discover More

Related Articles

VPF vs NPS

Voluntary Provident Fund (VPF)

Unnat Bharat Abhiyan in India

Ujala Scheme

Tax Free Bonds- Meaning, Features, Invest and Redeem

Svamitva Scheme