The Atal Pension Yojana Scheme Guide for 2024

Posted by  Fintra , updated 2023-12-06

With the India Government's successful implementation of the Pradhan Mantri Jan Dhan Yojana (PMJDY) that embraced the huge population to avail banking benefits by opening a zero balance account with the continuation of Jan Dhan Yojana, the Government then passed a new scheme known as Atal Pension Yojana (APY). It was affected and passed in the Union Budget of 2015-16 by the Finance Minister Mr Arun Jaitley.

Atal Pension Yojana (APY), a Government pension scheme, is open to all the citizens of India with its main focus on the unorganised sector. It is administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the National Pension System (NPS). Basically, 

Under this scheme, the beneficiaries are guaranteed to obtain a minimum monthly pension between Rs.1000 to Rs.5000. The subscribers can opt for monthly pensions that could be 1000, 2000, 3000, 4000, or 5000 rupees, which will begin after they turn 60 years of age. The amount of pension an individual receives will directly be related to the age at which it has joined APY and the monthly amount that is contributed.

In this blog, Fintra will highlight a few basic terms related to the scheme that will enhance your knowledge. Topics will include:

1. What is a Pension?
2. What is the Atal Pension Yojana?
3. Features and Benefits of Atal Pension Yojana
4. How to open Atal Pension Yojana (APY) Account offline and online? How to Invest in it?
5. How to Download APY Form
6. What will be your monthly contribution and mode of payment?
7. What will be the Government of India’s contribution to the scheme?
8. Restrictions on government contributions 

What is a Pension?

In simple terms, a pension is a fund in which an employed person adds a sum of money during its employment years and then uses them at the time of retirement to support their needs by receiving money in form of periodic payments.

What is the Atal Pension Yojana?

Atal Pension Yojana, an Indian pension scheme, is essentially targeted at the unorganized sectors like gardeners, maids, delivery boys, etc. This scheme was invented to replace the previous Swavalamban Yojana that wasn’t accepted well by the people living in India. The vital goal of the scheme is to ensure no Indian citizen has to worry about accidents, illness, or diseases during their old age- it basically gives them a sense of security. Even the private sector employees or employees working with an organization that doesn't give them pension benefits can apply for this scheme. The options of getting a fixed pension on attaining an age of 60 are Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000, or Rs. 5000. Pensions are determined based on the individual’s age and the contribution amount. upon the contributor’s death, its spouse can claim the pension, and if both the contributor and its spouse passes away then the nominee will receive the accumulated corpus. However, if the contributor dies before completing 60 years of age, its spouse is will be given two options- exit the scheme and claim the corpus or continue with the scheme for the balance period.

According to the investment pattern crafted by the government of India, the collected amount under the scheme will be managed by the Pension Funds Regulatory Authority of India (PFRDA). As per the plan, even the Government will make a co-contribution of 50% of the total contribution, or Rs. 1000 per annum, whichever is lower to the eligible subscribers who had joined APY between June 2015 and December 2015 for a period of 5 years, financial years 2015-16 to 2019-20. To avail Government’s co-contribution., the subscriber shouldn't be a part of any other statutory social security schemes like Employee’s Provident Fund or be paying income taxes.

Features and Benefits of Atal Pension Yojana

The features and benefits of Atal Pension Yojana are as follows:

• As a subscriber of the APY Scheme, the scheme enables the person to receive a periodic pension of Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000, or Rs. 5,000 after the age of 60 years until the death of the subscriber.
• If the subscriber of the scheme dies, the spouse is entitled to get the exact same pension amount as the subscriber, until their death. After the death of subscribers as well as the spouse, a nominee can receive the amount.
• To get the maximum benefit from the Atal Pension Yojana scheme Fintra experts advise that individuals should join this plan at the age of 18 and contribute, till they turn 40.
• Under this scheme, an individual is eligible to obtain a pension after it turns 60 years old. However, do bear in mind that the amount it'll get as a pension will depend on the contribution it makes towards this scheme. Since various contributions determine various pension amounts, if larger contributions are made then you'll obtain a higher amount of pensions later on. If you desire to change the corpus's amount, the government of India does allow you to increase and decrease by providing the facility for the amount of contribution. Only once every year this facility is provided.
• One of Atal Pension Yojana's best features is automatic debit. One may link its bank account with its Atal Pension Yojana account so that the individual's monthly contribution will directly be debited. Do note the account that gets linked with the APY account must have sufficient balance to keep the automatic debit feature going on, if it fails it can attract a penalty.
• There are certain policies to withdraw as well. Only when an individual attains 60 years of age, it's then eligible to annuitize its whole corpus amount, which is, it can get the pension monthly after closing their scheme. Do note one can only exit the scheme before 60 years only in case of terminal illness or death. If one dies before 60 years, the spouse is entitled to receive the pension amount. In such cases, the spouse also gets the option to either select the pension benefits or exit the APY with the accumulated corpus. If one wishes to exit APY before 60 years of age, it will then only receive cumulative contributions and earned interest thereon. To know more please click here.
• If there's a delay in the payment of the contribution, the penalties charged are stated below:

1. For contributions up to Rs. 100, Rs. 1 per month is charged.
2. For contributions up to Rs. 101 to 500/- per month, Rs. 2 per month is charged.
3. For contribution between Rs 501/- to 1000/- per month, Rs. 5 per month is charged.
4. For contributions beyond Rs 1001/- per month, Rs. 10 per month is charged. 

In case of discontinuation of payments of contribution amount, the following steps will be taken by the bank:

1. After 6 months, the account will get frozen.
2. After 12 months, the account will get deactivated.
3. After 24 months, the account will get closed. 

For more details please click here.

• The contributions made towards this scheme are eligible for tax exemptions under section 80CCD of the IT Act, 1961. The maximum tax exemption allowed under section 80CCD (1) is 10% of the gross total income of the individual. This is up to a limit of Rs. 1, 50,000. Moreover, under Section 80CCD (1B) one can get an additional tax exemption of Rs. 50, 000 for the contributions it makes towards Atal Pension Yojana. Fintra suggests consulting a tax professional regarding all these exemptions since these tax benefits can be availed under the specific provisions which are mentioned in the Income Tax Act.

How to open Atal Pension Yojana (APY) Account offline and online? How to Invest in it?

Atal Pension Yojana (APY) is open to all Indian citizens between the ages group of 18-40 years of age. You just need to inculcate or link this scheme with your savings account by filing an authorization form in a bank or a post office. The form requires details of your account number, spouse and nominee details, and authorization for auto-debit of contribution amount. Account-holders signing up for the Atal Pension Yojana scheme need to ensure that enough balance is maintained in the account every month for auto-debit, or else a monthly fine will be charged. For more details please click here.

To apply for Atal Pension Yojana (APY) online there's a subscriber form of Atal Pension Yojana online on the official banks' websites and other third party websites as well. You'll simply have to visit the website, download the subscriber form, fill it with the required details, and submit it to your respective bank. Along with this, other mandatory documents have also to be attached to easily open the Atal Pension Yojana account. In India, since one isn't allowed to make direct applications for the APY scheme, it is mandatory to submit these forms to any of the nearest branches of the banks that offer this scheme.

How to Download APY Form

Atal Pension Yojana account opening forms are easily availed offline from nearby bank branches that participate in the scheme. However, one can even download the form for free from the Pension Fund Regulatory and Development Authority (PFRDA) official website. Alternatively, the APY subscription form also can be availed from varied banking websites which include the public and private sectors.

What will be your monthly contribution and mode of payment?

Your monthly contribution depends upon the pension you want monthly and the age when you start contributing. Therefore, even if you join APY at 40 years of age you need to pay a premium for a minimum of 20 years to avail the pension.

The following Atal Pension Yojana Chart shows the amount to be paid monthly based on your plan and age:

To check the status of your contribution under APY please click here.

To check APY contribution through the app please click here.

Besides using the APY App, you can also use the official website to check your APY contribution. To know how please click here.

What will be the Government of India’s contribution to the scheme?

To encourage more people to join this scheme, the Government of India contributes a sum towards the Pension Scheme for a period of only 5 years i.e. from 2015-2020 only. This contribution will be done by the government only on accounts opened under the Atal Pension Yojana Scheme only between 1 June'15 and 31 Dec'15. Customers shouldn’t be income taxpayers and should not have been covered under any other Social Security Schemes.

The government will either be making 50% of the contribution of the subscriber’s monthly contribution or 1,000 Rs whichever is less. Moreover, first, the subscriber will have to pay the contribution then, the government will credit 50% of the monthly contribution made to the subscriber's account.

Restrictions on government contributions 

Individuals who are registered under other social security schemes are not eligible for contributions. Subscription to any of the below mentioned would make an individual ineligible for the Atal Pension Yojana Scheme (APY):

1. The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948.
2. Employees' Provident Fund & Miscellaneous Provision Act, 1952.
3. Seamen’s' Provident Fund Act, 1966.
4. Jammu Kashmir Employees' Provident Fund & Miscellaneous Provision Act, 1961.
5. Assam Tea Plantation Provident Fund and Miscellaneous Provision, 1955.
6. Other Statutory Social Security Schemes.

Conclusion

In all, the Atal Pension Yojana Scheme is the most suitable for those whose earnings are a part of lower-income group people or for those who don’t have fixed employment. It can also be subscribed by someone who doesn’t have a family member to look after in old age.

As the details above reveal, this scheme has been implemented to inculcate the habit of compulsory saving for the retirement stage of life for the workers of the unorganized sector. Moreover, Atal Pension Yojana (APY) is intended for people who desire to save small amounts of funds for a fixed pension, primarily daily wage workers since they are unable to save for their future once they retire. Those working in the private sectors who are neither tax-payees nor a part of any other social security scheme are allowed also to enjoy this scheme's benefits. All eligible family members may subscribe to APY in their names for higher pension plan benefits to their families.