Announced in the 2015-2016 budget, the Atal Pension Yojana (APY) scheme’s focus is towards the citizens of India who are in the unorganized sector. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) through the National Pension Scheme (NPS).
The Swavalamban Yojana was replaced by the APY as it was not well-received by the people. The main aim of Atal Pension Yojana is to ensure that the citizens of India do not have to worry about diseases or illnesses during their old age. In case an individual working in a private organisation is not provided with pension benefits, he/she can opt for APY.
The scheme was launched to focus on old people whose income is low and help them in saving money for their retirement.
Features of Atal Pension Yojana
- Subscribers will earn an ensured monthly pension between Rs.1,000 and Rs.5,000 under this scheme.
- The Indian Government sponsors the benefit of minimum pension.
- Rs.1,000 or 50% of the subscriber's contribution, whichever is lesser, is contributed by the Indian Government.
- An individual who has a bank account can join APY.
- Existing Swavalamban subscribers who are between the ages of 18 and 40 years will automatically be shifted to APY.
- If an existing Swavalamban subscriber is above 40 years old, he/she can choose to discontinue from the scheme by withdrawing the entire amount in a lump sum. An individual can also continue with the scheme until he/she reaches the age of 60 years in case they want to avail the benefits.
- Subscribers would earn a fixed monthly pension of Rs.1,000, Rs.2,000, Rs.3,000, Rs.4,000, and Rs.5,000 when they reach the age of 60 years. The monthly pension depends on the contribution they have made per month and the age when they opted for the scheme.
- The contribution amounts are low when a subscriber opts for the scheme at an early age and is higher as the age of the subscriber increases.
Eligibility to join Atal Pension Yojana
The eligibility criteria to opt for APY is mentioned below:
- The individual must be a citizen of India.
- He/she should be between the ages of 18 years and 40 years.
- The contributions must be made for a minimum of 20 years.
- Must have an active mobile number.
- The individual must have an active bank account and his/her Aadhaar Card must be linked to it.
- The age of exit and start of pension of the scheme is 60 years.
Enrollment for Atal Pension Scheme
- The scheme is provided by all nationalized banks.
- Forms are also available on the official website of the banks. It can be downloaded from there.
- The application can be submitted to the bank after completely filling it.
- A photocopy of your Aadhaar Card must be submitted to the bank.
- In case, you haven’t provided an active mobile number to the bank, you will need to.
- Currently, the form is available in Hindi, Gujarati, Marathi, Tamil, Telugu, English, Bangla, Kannada, and Odia.
Once the form is submitted, if it is approved you will get a confirmation message on your registered mobile number.
Contribution levels table
Below is an example of how contributions will work for fixed monthly pension of Rs.1,000, Rs.2,000, Rs.3,000, Rs.4,000, and Rs.5,000.
Alerts to subscribers
- Subscribers will be alerted by SMS regarding their balance and contribution on a periodical basis. Also, subscribers do have the option to change details such as nominee’s name, phone number, address, etc. if required.
- Other information such as auto-debit from their accounts and a subscription confirmation is sent via SMS to the registered mobile number. Therefore, it is important for the number to be active.
Penalties for default in payment
APY subscribers have an option to make payments on a monthly basis. In case there is a default in payments, banks will charge an extra amount. Below is the list of penalties banks will charge in case of default:
Discontinuation of payments
- If contributions are not made over 6 months, the account will be frozen.
- If no contributions are made for over 12 months, it will lead to deactivation.
- If no payments are made for 24 months, the account will be closed.
Exit from Atal Pension Yojana
- Once the subscriber completes 60 years of age, he/she will need to submit a request to the bank in order to withdraw monthly pension.
- Exit before the completion of 60 years is usually not permitted unless the beneficiary dies or is diagnosed with a terminal disease.
APY is considered as one of the safest schemes to save money. Since it was passed by the Parliament of India, even if there is a change in government, the scheme cannot be discontinued. Only the name of the scheme can be changed if there is a change in government. Also, with low monthly contributions it can help poor individuals who work in unorganized sectors to save money.