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Atal Pension Yojana (APY) is a government backed pension scheme launched in 2015–16 to offer retirement security to workers in the unorganized sector. APY scheme aims to provide a guaranteed monthly pension after the age of 60, helping individuals who do not have access to formal pension benefits. APY is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
APY was introduced as an improved version of the earlier Swavalamban Yojana, which saw limited participation. In the first year of its launch, the government also offered co-contributions to encourage people to join the scheme.
In this blog, we’ll explains what is APY scheme, who can apply, its benefits, contribution rules, and how it helps secure financial stability during retirement.
What is Atal Pension Yojana?
Atal Pension Yojana (APY) is a government backed retirement scheme designed to give financial security to individuals who may not receive pension benefits from their employers. It helps workers build a steady monthly income for their old age by contributing small amounts throughout their working years.
APY scheme is beneficial for people working in the unorganized sector, such as delivery workers, domestic helpers, drivers, or daily wage earners, who do not have access to formal pension plans. However, APY is not limited to them. Any Indian citizen between 18 and 40 years can join the scheme, including private sector employees and self-employed individuals.
Under APY, subscribers receive a guaranteed monthly pension between ₹1,000 and ₹5,000 after the age of 60, depending on the contribution made over time.
Features of APY Scheme
Here are features of APY scheme discussed below:
Joining Eligibility
To enroll in this scheme, you should be between 18 and 40 years old. You must have either a savings bank account or a post office savings account. Those who file income tax from 1 October 2022 cannot join the Atal Pension Yojana. According to the Finance Ministry, this change was made to ensure that the pension benefits reach mostly those who are financially weaker.
Installment Payment
In APY account, you need to deposit money every month, every quarter or every 6 months on specific dates. The amount you contribute each year depends on three factors. Firstly, your age when you open the account and which pension slab you choose between ₹1000 and ₹5000. Additionally, the total contribution is determined by how many times you deposit money in a year.
Automatic Debit
APY contributions are deducted automatically from the subscriber’s bank account every month. You only need to keep enough balance to ensure the auto-debit goes through. If the account has insufficient funds, a penalty may be charged.
Return of the scheme
In APY scheme, the money you contribute is invested, managed by fund managers like SBI Pension Fund, LIC Pension Fund and UTI Retirement Solution. Therefore, you may receive returns higher than the specified pension amount. However, if the returns are not sufficient to cover the agreed pension the government contributes to make up the difference and ensures you receive the specified pension amount.
This means that there is a guaranteed pension in this scheme and there is also an opportunity to earn additional returns.
Government Contribution to Eligible Subscribers
The government contributes to your retirement fund until the first five financial years. They provide 50% on the amount you contribute annually. However, the government’s contribution is capped at a maximum of ₹1000 even if your contribution exceeds this amount. To be eligible for the government contribution you must meet certain conditions.
You should not be an income taxpayer and you should not be a beneficiary of other statutory social security schemes like EPF, Coal Mines Provident Fund or Assam Tea Plantation Provided Fund. Additionally, the individual must have a permanent retirement account number (PRAN) with the Pension Fund Regulatory and Development Authority (PFRDA) and all installments for the entire year should be paid.
What is the Monthly Contribution for Atal Pension Yojana?
The chart below outlines the monthly contribution required for the Atal Pension Yojana (APY) based on entry age and desired monthly pension amount. Please note that actual contribution amounts may vary.
Payout to Nominees and Beneficiaries of APY
In case of the death of an Atal Pension Yojana (APY) subscriber, the nominee or beneficiary of the subscriber is entitled to receive a payout based on the chosen monthly pension amount.
| Monthly Pension Amount (in Rupees) | Return of Corpus to the Nominee of the Subscriber (in Rupees) |
|---|---|
|
1,000 |
170,000
|
|
2,000 |
340,000
|
|
3,000 |
510,000 |
|
4,000 |
680,000
|
|
5,000 |
850,000 |
How to Apply for Atal Pension Yojana?
You can open a savings account in any bank or post office. To do this you need to fill out the APY registration form and provide details like your mobile number and nominee information.
It’s not necessary to provide your Aadhar number during registration but you’ll have to do so later. Each subscriber can only open one APY account though every family member can open their own. Instead of going to the bank, you can also open your APY account online using these methods.
- Through Net Banking
You can start an Atal Pension Yojana (APY) account with the help of internet banking on your bank’s website or app. To do this, log in to your bank account, find the APY scheme, enter your personal details and nominee information. After that, choose the pension amount and approve auto-debit for installment payments.
- eNPS – National Pension System – NSDL
You can register for the Atal Pension Yojana (APY) on eNPS National Pension System – NSDL website. After visiting the website, click on the Atal Pension Yojana section and then click on APY registration. Following this, you need to fill out a form providing details such as your income tax status and bank information. you’ll need to choose the contribution amount for which you’ll have three options.
- Offline KYC
To complete the Aadhaar paperless offline KYC process, you need to provide the last six digits of your Aadhaar number and verify it with the OTP sent to your registered mobile number. Alternatively, you can generate this file on the UIDAI website.
For Aadhaar, input your Aadhaar number and verify it with the OTP received on your registered mobile number.
Virtual ID requires entering the 16-digit virtual identification number received from UIDAI and verifying it with an OTP. Then, choose your pension amount and contribution frequency, which you can change once a year. Provide nominee details as well. After that, sign in on the NSDL website for e-signing, and once the OTP is verified, your APY account will be opened.
Those ineligible for APY can consider other government schemes like PPF, NPS, and others for investment.
How to Download APY Form
You can get APY account opening form in any of the following ways:
- Visit the nearest branch of any bank that offers the Atal Pension Yojana and collect the form directly.
- Download and print the form from the official website of your bank, if they provide it online.
- You can also download APY form from the PFRDA (Pension Fund Regulatory and Development Authority) website.
Penalties for Late Payments
To contribute to the Atal Pension Yojana, set up auto-debit with your bank. This is the sole method for contributions. Insufficient balance incurs penalties:
- Rs. 1 penalty for monthly contributions up to Rs. 100
- Rs. 2 penalty for contributions between Rs. 101 to 500
- Rs. 5 penalty for contributions between Rs. 501 to 1000
- Rs. 10 penalty for contributions over Rs. 1,001
What if you Fail to Contribute to APY?
If you fail to contribute regularly to the Atal Pension Yojana (APY) due to missed auto-debit instructions:
- Your APY account is frozen after 6 months of non-payment.
- The account is deactivated after 12 months of non-payment.
- Automatic closure of the APY account occurs after 24 months of non-payment.
- Bank can recover the due amount at any time until the last day of the month. Recovery can happen whenever there are funds in the APY-linked bank account during the month.
Eligibility for Atal Pension Yojana (APY)
To join Atal Pension Yojana and receive pension benefits, applicants must meet the following conditions:
- Must be an Indian citizen.
- Age should be between 18 and 40 years at the time of enrollment.
- Applicants should have an Aadhaar-linked bank account.
- A valid mobile number is required for updates and verification.
- Subscribers must make regular contributions for at least 20 years.
- Applicants should not be covered under any other government-backed social security pension scheme.
- Individuals previously enrolled under the Swavalamban Scheme are also eligible and have been shifted to APY automatically.
Allocation of Funds in Atal Pension Yojana Investments
In the Atal Pension Yojana (APY), your money is invested across various assets to ensure stability and growth. Here’s a simplified breakdown of how your investment is allocated:
- Government Securities: Between 45% to 50%
- Debt Securities and Bank Term Deposits: Between 35% to 45%
- Equity and Related Instruments: Between 5% to 15%
- Asset Backed Securities, etc.: Maximum 5%
- Money Market Instruments: Maximum 5%
These allocations ensure a balanced investment strategy, aiming for a guaranteed pension while also offering potential returns above the guaranteed amount, which can benefit the subscriber or their nominees in case of unforeseen circumstances.
FAQS on Atal Pension Yojana
Who can apply for Atal Pension Yojana?
Any Indian citizen aged 18 to 40 years with a savings bank account and Aadhaar can apply. The person must contribute regularly for a minimum of 20 years.
What pension amount will I receive under APY?
APY offers a guaranteed monthly pension of ₹1,000 to ₹5,000 after you turn 60, depending on how much you contribute during your working years.
Can I exit the APY scheme before 60?
Premature exit is allowed only in special cases like death or terminal illness. Voluntary exit is permitted but with reduced benefits and certain deductions.
What happens if my APY contribution auto-debit fails?
If your bank account has insufficient balance, the auto-debit fails and a penalty is charged. Regular failures may temporarily freeze your APY account.
Can I increase or decrease my APY contribution amount?
Yes. APY allows you to upgrade or downgrade your pension amount once a year, based on your financial capacity and comfort.
