Atal Pension Yojana (APY) - Details Features & Benefits
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Atal Pension Yojana (APY) - Details Features & Benefits

Insurance Basics & Financial Advice Picture this: you are out with friends, and it’s a lovely evening. You are having the time of your life discussing your college experience. It soon becomes a little solemn as one person brings up the topic of retirement funds. The jolly mood turns bitter, and everyone remembers they need money when they grow old.

Atal Pension Yojana (APY) - Details, Features & Benefits

8 Minute |

Atal Pension Yojana (APY) - Details, Features & Benefits

Atal Pension Yojana (APY)

Picture this: you are out with friends, and it’s a lovely evening. You are having the time of your life discussing your college experience. It soon becomes a little solemn as one person brings up the topic of retirement funds. The jolly mood turns bitter, and everyone remembers they need money when they grow old. Such a situation is rather typical for the present world as more and more people begin to realise the importance of having income saved for their retirement.

Introducing the Atal Pension Yojana, a scheme launched by the government so citizens can have a worry-free retirement.

The Atal Pension Yojana (APY) aims to address the retirement needs of citizens in the unorganised sector. This voluntary scheme offers a guaranteed monthly pension upon reaching retirement age. A few examples of those who can benefit include farmers, carpenters, plumbers, and street vendors. Here is a detailed article.

What is Atal Pension Yojana?

As the name implies, Atal Pension Yojana (APY) is a pension scheme for workers in the unorganised sector in India that the Government of India launched in 2015. Its key objective is to ensure that pension provision is made so individuals can afford essential commodities during their old age.

The APY scheme allows people to join the scheme at 18 years to 40 years and provides pension contributions till 60 years of age. The contribution differs with the average amount of pension selected, ranging from ₹1,000/- to ₹5,000/- per month, depending on the subscriber’s age and the desired pension amount.

One of the major factors to understand about APY is that it caters more to low-income earners in society by providing them with a basic, inexpensive pension plan. Furthermore, the scheme has incentive provisions where the government matches the contribution of eligible subscribers, especially those from economically vulnerable groups.

This means that once they have reached 60 years of age, they are provided with a guaranteed pension payment they can rely on as a steady income during their retirement years. However, in case of the subscriber’s unfortunate demise during the tenure while in possession of a pension, they are allowed to nominate any of their legal heirs to receive the pension corpus.

In conclusion, the Atal Pension Yojana plays a vital role in reducing the pension deficit in India. It is appropriate for enhancing financial inclusion and ensuring the unorganised sector workforce a decent life after retirement.

What is the Objective of the APY Scheme?

As established earlier, the primary objective of the Atal Pension Yojana scheme is to provide financial security to individuals working in the unorganised sector after their retirement. It encourages regular savings habits to ensure a steady income stream post-retirement.

What is the Eligibility for Atal Pension Yojana?

The Atal Pension Yojana eligibility criteria is as follows:

  • Indian citizens aged between 18 and 40 years
  • A savings bank account

It's important to note that there is no income bar to join this scheme.

Benefits of Atal Pension Yojana

The Atal Pension Yojana benefits include the option to increase contributions for a higher pension amount, assurance of a minimum monthly pension upon retirement, and automatic commencement of pension payouts at the age of 60. Here are the Atal Pension Yojana details.

Possibility of raising contributions

The APY allows you to increase your monthly contributions at any point during the scheme tenure. This flexibility helps you adjust your contributions based on your evolving income and desired pension amount.

Guaranteed pension

One of the most significant benefits of APY is the guaranteed minimum monthly pension you receive after reaching 60 years of age. The pension amount depends on your chosen contribution tier and the total contributions made throughout the scheme.

It's important to remember that some life insurance products can also offer guaranteed pensions. Carefully compare features and benefits before making a decision.

Automatic withdrawal

There's no need to worry about manually applying for your pension upon reaching retirement. The APY automatically disburses the pension amount to your bank account every month starting from the age of 60. There's also no need to claim or apply for the pension manually. It all happens automatically.

Age Limits

The Atal Pension Yojana age limit is between 18 and 40 years. There is no maximum age limit to continue contributing, but the pension disbursement begins at 60 years of age.

Withdrawal policies

Premature withdrawal from the APY scheme is generally discouraged. However, in specific situations like terminal illness or death of the spouse, partial withdrawal is allowed.

If the subscriber (the person enrolled in APY) is diagnosed with a terminal illness, they can withdraw up to 50% of the accumulated corpus (total contributions and interest earned) from their APY account. This can help cover medical expenses or other pressing financial needs during a difficult time.

In case of the subscriber's death, the spouse receives the pension amount, and if both the subscriber and spouse pass away, the accumulated corpus is returned to the nominee.

If the subscriber's spouse unfortunately passes away, the subscriber can withdraw up to 50% of the accumulated corpus. This can provide some financial support during a period of grief and adjustment.

Terms of penalty

Make your APY contributions on time to avoid penalties. The penalty amount increases the longer your contribution is delayed. To ensure you receive the full pension you deserve and avoid unnecessary charges, try your best to contribute on time.

Tax exemptions

The Atal Pension Yojana offers tax benefits. Investments up to Rs 1.5 lakhs made towards APY qualify for tax deductions under Section 80CCD (1) of the Income Tax Act 1961.

Additionally, the pension amount received is exempt from income tax. For example, if your annual contribution is ₹50,000, you can claim a tax deduction of up to ₹50,000 under Section 80CCD (1b).

How to Download the APY Form

The APY application form can be downloaded from the official website of the Pension Fund Regulatory and Development Authority (PFRDA) or your bank's website.

How to Apply for Atal Pension Yojana?

You can apply for the Atal Pension Yojana by visiting your bank branch that offers APY services. The bank will assist you with the application process and collect the necessary documents.

How to Fill the Atal Pension Yojana Form?

The APY application form is fairly straightforward. It typically includes sections for your personal details, chosen pension amount, nominee information, and bank account details. Fill out the form carefully and ensure all information is accurate.

If there are any errors on your Atal Pension Yojana (APY) application form, the consequences can vary depending on the nature of the error. For minor errors that don't significantly impact your identity or bank account details, the bank might contact you to clarify and update the information.

For major errors e.g., incorrect nominee details or incorrect pension amount selection, the processing of your application might get delayed. You'll need to submit a revised application form with the corrected information.

What Is the Investment Plan for the Atal Pension Yojana (APY)?

The Atal Pension Yojana invests your contributions in a mix of government securities and equity instruments. The asset allocation ratio changes progressively as you near retirement age, with a higher focus on safer investments like government bonds closer to retirement.

What is the Monthly Contribution for Atal Pension Yojana?

The monthly contribution amount for APY varies depending on your desired pension amount and your age of entry into the scheme. There are five pension plan options with corresponding monthly contribution amounts.

For example, if you wish to receive a ₹5,000 monthly pension upon retirement and join the scheme at the age of 30, your monthly contribution would be approximately ₹210. It's recommended to use the APY pension calculator available on the PFRDA website to determine the specific contribution amount required to achieve your desired pension.

To determine the most suitable APY plan for you, consider factors like your desired retirement income, your current earning potential, and your risk tolerance.

Atal Pension Yojana Withdrawal Process

Premature withdrawal from APY is generally not allowed. However, there are exceptions for specific circumstances. In case of terminal illness, the subscriber can withdraw up to half of the accumulated corpus. If the subscriber's spouse dies, they can withdraw up to half of the corpus. In the unfortunate event of the subscriber's death, the spouse receives the pension amount.

If both the subscriber and spouse pass away, the nominee receives the accumulated corpus.

Penalties for Late Payments

This implies that the monthly APY contribution is to be made, and in the event that it is paid late, it is considered as a violation. The specific penalty that applies to the construction of the affected project depends on a number of factors, one of which is the delay period. For example, if the delay does not exceed one month, the penalty falls into the category of a small penalty, increasing with the growth of the delay. Timely and frequent contributions force the pension agency to pay the expected amount free of charge.

Recent Government Updates on Atal Pension Yojana

The Government of India constantly strives to improve the Atal Pension Yojana. Recent updates include increasing the upper age limit for joining the scheme from 40 years to 60 years. This offers greater flexibility for individuals to enrol.

FAQs - Atal Pension Yojana (APY)

Here are some frequently asked questions about the Atal Pension Yojana.

If I want to open an Atal Pension Yojana account, what is the procedure to be followed?

Visit your bank branch offering APY services. The bank staff will guide you through the application process and collect the required documents.

Is it compulsory to declare a nominee when applying for Atal Pension Scheme?

Yes, nominating a beneficiary is mandatory when applying for the APY scheme. This ensures your accumulated pension corpus reaches your intended recipient in case of your demise.

Can I apply for APY online?

Currently, the Atal Pension Yojana online application is not available. You need to visit your bank branch to initiate the application process.

What are the documents required to apply for the APY Scheme?

Documents typically required for applying include a completed application form, ID proof, address proof, and bank account details. Specific requirements may vary depending on your bank.

What are the age criteria to join this scheme?

The age limit to join the APY scheme is between 18 and 40 years. A recent update allows individuals up to the age of 60 to enrol.

How is the due date for the monthly contribution decided?

The due date for your monthly contribution is typically set when you open your APY account. You can choose a date that aligns with your income cycle to facilitate timely payments.

Is it possible to have more than one pension account under this scheme?

No, you can only have one APY account. The scheme is designed to provide a single pension stream upon retirement.

How will I know if the pension scheme is activated?

Once your APY application is processed, you will receive a confirmation from your bank or the PFRDA. This confirms your enrollment and successful account activation.

When is the last date to join the Atal Pension Yojana Scheme?

There is no specific last date to join the APY scheme. However, to maximise the benefits from compounded interest, it's advisable to join at a younger age.

Can I join the Atal Pension Yojana scheme without holding an Aadhaar number?

While Aadhaar linking is encouraged for APY accounts, it is not mandatory. You can still apply for the scheme without an Aadhaar number.

Can members of the Employees Provident Fund (EPF) enrol in the Atal Pension Yojana scheme?

Yes, membership in the Employees' Provident Fund (EPF) does not bar you from enrolling in the Atal Pension Yojana. Both schemes cater to different retirement needs.

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