Atal Pension Yojana (APY)

The Atal Pension Yojana (APY) is a government-backed pension scheme launched by the Government of India in June 2015. The scheme is aimed at providing a sustainable pension to citizens of India, particularly those in the unorganized sector, who may not have access to formal pension systems. The scheme is named after the former Prime Minister of India, Atal Bihari Vajpayee. (Let’s see National Pension schemes article)

Atal Pension as a central Gov Intiative

Atal Pension Yojana (APY) is a government-backed pension scheme launched by the Government of India in 2015. The scheme aims to provide a regular pension income to all Indian citizens in the unorganized sector who are not covered under any statutory social security scheme.

Under the APY scheme, subscribers can choose a monthly pension amount ranging from Rs. 1,000 to Rs. 5,000, depending on their contribution amount and age. The pension amount is guaranteed by the government and is payable to the subscriber’s spouse after his/her death. If both the subscriber and the spouse die, the pension corpus is returned to the nominee.

To be eligible for the APY scheme, the subscriber must be between 18 and 40 years of age and have a savings bank account. The subscriber is required to make regular contributions to the scheme till the age of 60. The contribution amount varies based on the chosen pension amount and the subscriber’s age at the time of joining.

The APY scheme aims to provide a minimum pension amount to all subscribers, thereby ensuring financial security for those in the unorganized sector who may not have access to formal pension schemes.

Feature

Atal Pension Yojana (APY) is a government-backed pension scheme in India aimed at providing financial security to the unorganized sector workers. Here are some of the key features of the scheme:

1. Eligibility: Any citizen of India between the ages of 18 to 40 years can join the APY.
2. Pension amount: The scheme offers a guaranteed minimum pension amount ranging from Rs. 1000 to Rs. 5000 per month, depending on the contribution made and the age of the subscriber at entry.
3. Contribution: The subscriber can contribute to the scheme for a minimum of 20 years and a maximum of 42 years. The contribution amount depends on the age of the subscriber at entry and the pension amount chosen.
4. Mode of contribution: The subscriber can contribute to the scheme monthly, quarterly or half-yearly basis through an auto-debit facility from their savings bank account.
5. Government co-contribution: The government provides a co-contribution of 50% of the subscriber’s contribution or Rs. 1000 per year, whichever is lower, for a period of 5 years for subscribers who joined the scheme between June 1, 2015, and December 31, 2015.
6. Nomination: The subscriber can nominate his/her spouse or any other nominee to receive the pension benefits in case of his/her death.
7. Portability: The scheme is portable across all banks and all geographical locations in India.
8. Tax benefits: The contributions made towards the APY are eligible for tax benefits under Section 80CCD of the Income Tax Act, 1961.

Need

The need for APY arises due to the lack of a comprehensive social security system in India, particularly for the unorganized sector. This has left a large section of the population vulnerable to financial difficulties in old age, as they do not have a regular income or any pension scheme. APY aims to address this issue by providing a fixed monthly pension to subscribers after they reach the age of 60.

APY is also designed to encourage people to save for their retirement. The scheme offers a fixed pension amount ranging from Rs. 1,000 to Rs. 5,000 per month based on the contributions made by the subscriber and the age of entry. The earlier a person joins the scheme, the lower the contribution amount and the higher the pension amount. The contributions made towards the scheme are invested in government securities and are managed by the Pension Fund Regulatory and Development Authority (PFRDA).

Overall, APY is a much-needed initiative to provide a social security net to the unorganized sector of India and help them save for their retirement.

Application Procedure

The application procedure for Atal Pension Yojana (APY) can be completed in a few simple steps:

1. Visit the nearest bank or post office branch that offers the APY scheme.
2. Fill out the APY registration form with the necessary details such as name, date of birth, Aadhaar number, bank account details, and nominee details.
3. Choose the pension amount you want to receive and the frequency of payment (monthly, quarterly, or half-yearly).
4. Choose the age at which you want to start receiving the pension (60 years is the minimum age).
5. Provide your mobile number and email ID for communication purposes.
6. Sign the form and submit it along with a photocopy of your Aadhaar card and the first contribution amount (which varies depending on the age at which you join the scheme and the pension amount chosen).
7. Once the bank verifies the details and the contribution, your APY account will be activated.

It’s important to note that the APY scheme is available to all citizens of India who are between the ages of 18 and 40 years and have a savings bank account.

Conclusion

Overall, APY provides a simple and affordable way for unorganized sector workers to save for their retirement and receive a guaranteed minimum pension amount. The Atal Pension Yojana is a significant step toward providing financial security to those who may not have access to formal pension schemes. By encouraging regular savings and ensuring a fixed pension amount during old age, the scheme contributes to improving the overall financial well-being of individuals in the unorganized sector.