Objectives of the scheme
The Atal Pension Yojana aims to help people who work in jobs like house help, gardeners, and delivery personnel – jobs that are not very organised. The main goal is to make sure these workers feel secure and are protected from things like accidents, illnesses, and diseases.
Additional read: SSY Scheme
Atal Pension Yojana details
Here are the key details:
- The pension starts once the subscriber reaches 60 years of age.
- Subscribers can choose a monthly pension ranging from Rs. 1,000 to Rs. 5,000. Their contribution amount will be calculated accordingly.
- Contribution to the Atal Pension Yojana (APY) qualify for tax benefits under section 80CCD(1).
- Having a bank account is a requirement for the scheme, and the deposit amount is automatically deducted from the account at regular intervals.
Benefits of Atal Pension Yojana (APY)
1. Benefits at Age 60:
Guaranteed Minimum Pension: Subscribers receive a guaranteed minimum pension of Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000, or Rs. 5,000 per month until their death, depending on contributions.
Spouse Pension: Upon the subscriber's death, their spouse continues to receive the same pension amount for life.
Return of Pension Wealth to Nominee: After the death of both the subscriber and spouse, the accumulated pension wealth up to age 60 is returned to the nominee.
2. Tax Benefits
Contributions to APY qualify for tax deductions under Section 80CCD (1), similar to the National Pension System (NPS).
3. Voluntary Exit (Before Age 60):
Subscribers receive a refund of their contributions plus net accrued income, minus account maintenance charges. However, those who joined before March 31, 2016, and received government co-contributions won't receive those back.
4. Death Before Age 60
Option 1: The spouse can continue contributing to the subscriber's APY account, keeping it in their own name, and receive the same pension until their death.
Option 2: The entire accumulated pension corpus is returned to the spouse or nominee.
Eligibility criteria of Atal Pension Yojana (APY) Scheme
Eligibility criteria for Atal Pension Yojana (APY) include:
- The Subscriber's age must be between 18 and 40 years
- Subscriber should have a saving account in a bank or post office savings account
- From October 2022, citizens who have paid income tax or have a history of paying income tax are not eligible to join APY.
How to open Atal Pension Yojana account?
To open an Atal Pension Yojana (APY) account, follow these steps:
- All nationalised banks offer the APY scheme, and individuals interested in opening an APY account can visit their respective branches or go to the bank's website to download the form.
- The application form is available in multiple languages.
- Fill the form and submit it to respective bank branch.
- Submit a photocopy of your Aadhaar card when applying.
Nomination in Atal Pension Yojana account
Nominee details are mandatory for an APY account, with the spouse being the default nominee for married subscribers. Unmarried individuals can nominate someone else but must update spouse details upon marriage.
Aadhaar information of the spouse and nominee can be provided for the APY account.
How to fill application form
To fill out an Atal Pension Yojana (APY) application form, follow these steps:
Section 1 – Include your bank information, such as bank name, bank account number, and bank branch details.
Section 2 – Fill in personal information, including your name, date of birth, email-ID, marital status, spouse's name, nominee's name, relationship with the nominee, age, and mobile number. Also, provide Aadhar Card details of your spouse (if married) and nominee.
Section 3 – State the chosen pension amount: Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000, Rs. 5,000. Based on the pension amount, the monthly investment amount will be calculated and filled in by the bank.
Additional read: Ladli Laxmi Yojana
Atal Pension Yojana penalty charges
If payments are delayed, monthly penalty charges for Atal Pension Yojana (APY) will be imposed as follows:
- For monthly contributions up to Rs. 100, a penalty of Rs. 1 will be charged.
- Contributions ranging from Rs. 101 to Rs. 500 will incur a penalty of Rs. 2.
- If the monthly contribution is between Rs. 501 and Rs. 1,000, the penalty charges will be Rs. 5.
- Contributions exceeding Rs. 1,001 will attract a penalty of Rs. 10.
What happens if you fail to contribute to APY?
- Your account will be frozen, If no payments are made for 6 months.
- The account will be deactivated if no payments are made for 12 months.
- The APY account will be closed if payments are not made for 24 months.
How is APY money invested?
Here is how APY money is typically invested:
- Government securities: 45% to 50%.
- Term deposits of banks and debt securities: 35% to 45%.
- Equity and equity-related instruments: 5% to 15%.
- Asset backed securities: Up to 5%.
- Money market instruments: Up to 5%.
Tax benefits for APY subscribers
Investors can enjoy tax benefits from Atal Pension Yojana as per Section 80CCD of the Income Tax Act. The maximum tax exemption limit is 10% of the total income, up to Rs. 1.50 lakh under Section 80CCD (1).
Additionally, an investor in APY qualifies for an extra tax exemption of Rs. 50,000 annually under Section 80CCD (1B) for contributions of Rs. 50,000 annually.
It is important to note that tax regulations may undergo periodic revisions.
While the APY offers tax advantages, remember that fixed deposits offer competitive interest rates. Bajaj Finance provides one of the highest interest rates in the market, up to 8.85% p.a. on their fixed deposits. You can consider a Bajaj Finance FD alongside your APY contributions for the potential to grow your savings faster.
Additional read: Post Office Scheme
Withdrawal procedure from APY
- After reaching 60 years of age, subscriber can ask the respective bank to give you the smallest guaranteed monthly pension, or possibly more, if the investments did better than what was promised in APY.
- If subscriber pass away after the age of 60, his spouse will receive the same pension amount. If both the subscriber and spouse passed away, the nominee will receive the entire amount.
- If the subscriber passes away before turning 60, his spouse can keep paying into account until the subscriber would have turned 60 and get the same pension. Or if she do not want to invest, she can claim the entire saved amount.
Conclusion
Atal Pension Yojana offers crucial financial protection for workers of unorganised sector. With guaranteed pensions, tax benefits, and straightforward withdrawal processes, APY aims to ensure a respectable retirement for everyone.
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