What is Atal Pension Yojana (APY)?
Atal Pension Yojana (APY) is a savings scheme launched by the government of India in the year 2015 for the unorganised sector workers in order to help in developing a habit to save for a financially secured future after retirement. This scheme is launched out of concern for workers in the unorganised sector for them to get a steady flow of income after retirement.
Under this scheme, there is a guaranteed minimum monthly pension for workers that ranges between Rs. 1000 and Rs. 5000 per month. The APY scheme is managed by Pension Fund Regulatory and Development Authority (PFRDA) and is on the model of the National Pension System (NPS). Workers who are subscribed to this scheme can opt for monthly pension ranging between Rs 1000 and Rs. 5000 at the age of 60 years or after. State government is also allowed to offer an additional co-contribution to APY workers in their local states. This scheme is considered to be a voluntary scheme.
Objective of the APY scheme is to basically facilitate in ensuring income security to the workers in the unorganized sector such as household staff, gardeners, delivery services, janitors, etc. after their retirement and to help them by providing protection during emergencies.
Benefits of APY:
1. Tax Benefits
This pension scheme provides tax benefits similar to National Pension Scheme (NPS) and hence, contributions to this APY scheme can be claimed for up to Rs.1.5 lacs under Section 80CCD of Income Tax Act,1961. Additional deductions of up to Rs.50,000 p.a. under section 80CCD(1B) of IT Act,1961.
2. Minimum Pension Amount Guaranteed
This scheme assures a minimum pension amount of Rs. 1000 to Rs. 5000 to subscribers after the age of 60 years till death.
3. Death Benefits
- Minimum Pension Amount Guaranteed For Spouse
In the case of sudden demise of a subscriber, the spouse of the subscriber is entitled to receive the same pension amount as that which was entitled to the subscriber.
2. Pension Wealth Guaranteed to Nominee
In the case of sudden demise of the subscriber and spouse of subscriber, the pension amount accumulated till the age of 60 years of subscriber will be given to the nominee of the subscriber.
4. Premature Exit Facility
Premature exit is permitted from the APY scheme. The subscribers will be refunded only the contributions made by him along with the return earned on the accumulated sum till date.
Eligibility of APY Scheme:
For the APY scheme, there is an eligibility criterion set up by the Government of India which is as follows:
1. All Indian citizens who qualify in the age range between 18 years and 40 years are eligible for this scheme.
2. Those who have applied for this scheme need to contribute for at least 20 years.
3. Those who have enrolled under Swavalamban Yojana are eligible to be migrated to the Atal Pension Scheme automatically.
How to Apply for Atal pension yojana?
Those who are eligible and interested in the scheme can go through following steps that discuss the procedure to apply to open an account in the APY scheme.
1. This scheme is offered in all of the nationalised banks hence one can go there to apply.
2. The application form for this scheme needs to be filled which is available in several languages such as English, Odia, Tamil, Telugu, Marathi, Gujarati, Kannada, Bangla. The application form can be received via offline or online mode. For online mode, APY scheme application is available for free on several websites like Pension Fund Regulatory and Development Authority (PFRDA) official site, banking sites, etc. This application form is to be submitted after filling up.
3. There is a requirement to provide a valid contact number.
4. There is a requirement of Aadhar card copy as well for submission.
5. When the application form is approved then a confirmation message is sent by the concerned department.
6. At the time of opening an account, the first contribution amount will get deducted from the linked bank account and the bank will issue a PRAN Number.
Components of APY scheme application form:
The elements of the application form of the APY scheme are discussed below that can be noted in order to fill APY scheme application in a precise and correct manner:
1. Section 1
This section involves mentioning of Bank details such as Bank Account Number, Bank Name and Bank Branch information.
2. Section 2
This section involves mentioning personal details such as name of applicant, birth date, email address, marital status, age, contact details, Aadhar Card details, name of spouse, number of nominees, nominee’s name, nominee’s relation, etc.
3. Section 3
This section involves mentioning details of pension which is to be provided such as amount of pension selected, the monthly contribution amount, etc.
4. Extra details in the case where minor is selected as nominee
This part involves mentioning details of minor nominees such as birth date, guardian name, etc.
This section requires a signature or thumb impression that declares that eligibility criteria has been met, terms and conditions have been read and understood, information provided is correct and that there is no existing account under NPS.
6. Acknowledgment- Subscriber Registration for Atal Pension Yojana (APY)
This is the last section of the form and this is to be filled in the branch of the concerned bank. This section is filled by a bank agent.
Penalty Charges under APY scheme:
Delayed deposits in this scheme may lead to penalty charges which are discussed as follows:
1. Penalty of Re. 1 is charged if there is a case of delayed contributions being up to Rs. 100 per month.
2. Penalty of Rs. 2 is charged if there is a case of delayed contributions ranging between Rs. 101 and Rs. 500 per month.
3. Penalty of Rs. 5 is charged if there is a case of delayed contributions ranging between Rs. 500 and Rs. 1000 per month.
4. Penalty of Rs. 10 is charged if there is a case of delayed contributions ranging between Rs. 1001 per month.
If there is a case of cease in deposits, it may lead to below mentioned actions:
1. If there is a case of deposits ceasing for a term of six months, the account gets frozen.
2. If there is a case of deposits ceasing for a term of 12 months, the account gets deactivated.
3. If there is a case of deposits ceasing for a term of 24 months, the account gets closed.
Contribution Chart of the APY Scheme:
The contributions to this scheme can be made in different frequencies such as monthly, quarterly, half-yearly.
The table below is about the contributions per month on the basis of age of entering the scheme
|Age of entering the scheme in years||Overall years in contribution||Contribution amount required per month|
|Pension of Rs. 1000||Pension of Rs. 2000||Pension of Rs. 3000||Pension of Rs. 4000||Pension of Rs. 5000|
Frequently Asked Questions (FAQs)
1. Which body administers the APY scheme?
Pension Fund Regulatory and Development Authority (PFRDA) administers the APY scheme.
2. Is there any tax benefit provided by the APY scheme?
Yes, contributions to this APY scheme can be claimed under Section 80CCD (1B) of Income Tax Act. Also, additional deductions of up to Rs.50,000 in a financial year under section 80CCD(1B) of Income tax Act,1961.
3. Is a bank account necessary in order to enroll in the APY scheme?
Yes, a bank account is compulsory if one is considering applying to the APY scheme.
4. Is premature exit permitted in the APY scheme?
Yes, premature exit from the APY scheme is permitted.
5. Is the nominee facility available in the APY scheme?
Yes, a nomination facility is offered in the APY scheme.
6. Is the application form of the APY scheme available online?
Yes, application form can be downloaded free of cost for the APY scheme from several sites such as PRFDA official website and banking sites.
7. What happens to an APY account if there is a case of continuous default?
There is continuation of deduction in APY account for account maintenance and other related charges till it becomes nil.
8. Can multiple accounts be opened in the APY scheme?
No, multiple accounts cannot be opened in this scheme. A subscriber can open just one account.
9. Can minors open APY accounts?
No, minors cannot open APY accounts.
10. Is the physical statement of the transaction provided?
Yes, physical statements of transactions are provided under the APY scheme.
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