Atal Pension Yojana, a pension scheme introduced by the Government of India in the year 2015-16 with the objective of financially encourage the workers of the unorganized sector. This scheme is regulated by the Pension Funds Regulatory Authority of India (PFRDA). It is an extension of the recognized NPS (National Pension Scheme) and replaces previous Government’s Swavalamban Pension Yojana which was not well accepted by the mass.
Eligibility
If an individual wants to invest in APY, he/she must satisfy the following requirements:
- Must be citizen of India.
- Must have a savings bank account.
- Should be in the age group of 18 to 40.
Features
The important features of APY are mentioned below:
- Monthly contribution and mode of payment: Monthly contribution of APY depends on the chosen final corpus amount and the preferred monthly pension by the subscriber along with his/her age at the time of subscribing for the scheme. The subscriber is required to opt for a monthly pension from Rs.1000 to Rs.5000 which he/she will receive at the age of 60 years, depending on their contributions, which itself will be based on the age of joining the APY. The contribution levels will vary and will be low if subscriber joins early and increase if he joins late.
- Automatic Debit: Under the APY scheme the beneficiary’s bank account is linked with his/her pension account and the monthly contribution get automatically debited from the beneficiary’s account. In this case, the beneficiary must keep required balance in their savings account on the stipulated due date to avoid late payment penalty.
- Withdrawal Policies: Upon completion of 60 years, the beneficiary will submit the request to the associated bank for drawing the monthly pension amount. Subscriber’s existence from the scheme before attaining the age of 60 is not permitted, however, it is permitted only in some exceptional cases, i.e., in the event of death of the subscriber or terminal illness. In the case of beneficiary’s death before reaching the age of 60 then his/her spouse shall be entitled to receive the pension amount. However, the spouse has the option either to exit the scheme with the corpus amount or continue to receive the pension amount on monthly basis.
- Penalty for Default in Payment: If the subscriber delays in payment of monthly contribution, he/she will be liable for penalty. The charges for penalty are shown below:
- Rs.1 per month for contribution up to Rs.100 per month.
- Rs.2 per month for contribution up to Rs.101 to Rs.500 per month.
- Rs.5 per month for contribution between Rs.501 to Rs.1000 per month.
- Rs.10 per month for contribution beyond Rs.1001 per month.
Beneficiary’s discontinuance in the payment of contribution shall lead to the following:
- After 6 months account will be frozen.
- After 12 months account will be deactivated.
- After 24 months account will be closed.
- Tax Exemptions: Contributions towards the APY is available for tax exemption under section 80CCD of the Income Tax Act, 1961.
- Nominee Facility: Under APY, nomination facility is available. In case of the death of the beneficiary, the spouse of the deceased will be benefitted with the scheme. In the event of death of both the beneficiary and his/her spouse, the nominee shall be entitled to receive the entire corpus amount.
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