- APY Details
- Features and Benefits of APY
- APY Eligibility
- APY Monthly Contribution
- Co-contribution Scheme
- Operational Work of APY
- APY Penalty Charges
To inculcate a habit of compulsory saving for retirement, the Government of India in 2015 announced the Atal Pension Yojana (APY) for the workers of the unorganized sector. According to the 66th Round of NSSO Survey of 2011-12, 88% of Indian workers don’t have income support during their old age!Read more
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Table of Content
The Atal Pension Yojana is aimed at people who want to save a small amount of money for a fixed pension (primarily daily wage workers who are unable to save for their future), once they retire. People working in the private sector, who are neither tax-payees nor a part of any other social security scheme, can also enjoy its benefits. All eligible family members can subscribe to APS in their names for higher pension plan benefits to their families.
Every eligible citizen who joins the Atal pension plan between 1 June 2015 and 1 Dec 2015 will get 50% of the contribution amount or Rs.1000/year, whichever is lower. This co-contribution by the Government will hold good for a maximum of 5 years.
You can get a fixed pension ranging from Rs.1000 to a maximum of Rs. 5000/month by investing through this scheme.
The eligible age to join the Atal Pension Yojana is 18 years and up to 40 years.
You will start receiving your pension from the age of 60.
The minimum period of contribution will be 20 years.
You can exit from the scheme only in case of exceptional circumstances such as the death of a beneficiary or a terminal disease.
Any false declaration in the application form will lead to loss of the Government’s contribution and penalty.
Below are the Benefits and features of Atal Pension Yojana as follows:
Feature to Increase Contribution: As explained earlier, you are eligible to receive the pension from Atal Pension Yojana after you become 60 years old. The amount you get as a pension depends on the contribution you make towards this scheme. Various contributions determine different pension amounts. Therefore, this can be in a way that you decide to make larger contributions to get a higher amount of pension later. To change the amount of corpus, the government of India allows increasing and decreasing facility for the amount of contribution. This facility is provided once every year.
Automatic Debit: One of the best parts of Atal Pension Yojana is the feature of automatic debit. As a beneficiary of this scheme, you can link your bank account with your Atal Pension Yojana account, and your monthly contribution is directly debited. The account that you link with your APY account should have a sufficient balance for automatic debit falling which can attract a penalty.
Guaranteed Pension: As a beneficiary of Atal Pension Yojana you are eligible to get a periodic pension of Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000, or Rs. 5000 as per your monthly contribution.
Policies to Withdraw: As a beneficiary of the APY scheme, when you attain the age of 60 years, then you are eligible to annuitize the whole corpus amount, which is, you can get the pension monthly after closing this scheme with your respective bank. It is to be noted here that you are allowed to exit the scheme before 60 years only in case of terminal illness or death. In case of death before 60 years, the spouse is entitled to get the pension. The spouse in such a case has the option to either choose the pension benefits or can exit the APY with the accumulated corpus. However, if you choose to exit Atal Pension Yojana before 60 years of your age, you will only get cumulative contributions and earned interest thereon.
Age Restrictions: Those who are more than 18 years and are less than 40 years are eligible to invest in this scheme. Therefore, students of the college can invest in Atal Pension Yojana for creating a corpus for their old age. In addition to this, 40 years is set as the maximum age to get this scheme. This is to ensure that you make contributions for at least 20 years.
Penalty Terms: If you delay the payment of the contribution, then the below-mentioned penalties are charged:
1 for monthly contributions of a maximum of Rs. 100.
2 for monthly contributions within Rs. 101 and Rs. 500.
5 for monthly contributions within Rs. 501 and Rs. 1000.
Rs. 10 for monthly contributions of Rs. 1001 and more.
If you fail to pay towards this scheme continuously for six months, then the amount has to be frozen and if this continues for continuously 12 months, then your account will be deactivated and the accumulated amount along with the interest will be returned to you.
Tax Exemptions: The contributions you make towards Atal Pension Yojana are eligible for tax exemptions under section 80CCD of the IT Act, 1961. The maximum tax exemption allowed u/s 80CCD (1) is 10% of the gross total income of a concerned person. This is up to a limit of Rs. 1, 50,000. Under Section 80CCD (1B), an additional tax exemption of Rs. 50, 000 for all the contributions that one makes towards Atal Pension Yojana is allowed. With all this, it is suggested to consult a tax professional regarding these exemptions as these tax benefits can be availed as per the specific provisions that are mentioned in the Income Tax Act.
Eligibility criteria to join the Atal Pension Yojana Scheme are as under:
Consumers who hold a valid savings account qualify to open an Atal Pension Yojana account.
The age of the applicant must be between 18 and 40 years
Each applicant must have a mobile number that he has to register at the time of application.
The Government also gives a co-contribution amount to certain subscribers of Atal Pension Yojana.
If a modish subscriber begins with contributing at the age of 18, the monthly sum needed will be Rs. 42 per month to get an amount of pension of Rs. 1000. The monthly amount of contribution will vary as per the payment’s tenure, banking on when the person joins the Atal Pension Yojana. Contributors can make contributions on monthly basis via auto-debit service available on the bank account in the country. If a client declines the payment of the monthly contribution amount, then he is free to re-enter the APY scheme by making payment of the rate of interest and the due principal amount for the exact duration.
If you want to invest in Atal Pension Yojana every month, you have to contribute as per the below-mentioned table. The monthly contribution amount depends on the entry age and the target income per month that you want after retirement.
|Age at Entry (Years)||Total Years of Contribution||Required Monthly Contribution Amount|
|Monthly Pension of Rs. 1000||Monthly Pension of Rs. 2000||Monthly Pension of Rs. 3000||Monthly Pension of Rs. 4000||Monthly Pension of Rs. 5000|
Note: The monthly chart of Atal Pension Yojana is indicative and the actual amount of contribution may change.
For the sake to encourage citizens to open an APY account, the Indian Government will also make contributions towards the pensions plan for the duration of five years, i.e. from the year 2015 to 2020. The contributions will be made to APY subscriber accounts that got activated between June 1, 2015, and December 31, 2015. The customers must not be income taxpayers and must not get covered under Statutory Social Security Schemes. The Indian Government’s contribution is either 50 percent of the amount of the monthly contribution by the subscriber or Rs. 1000, whichever is lesser, for the duration of five years. It is necessary to get the contribution by Government, the Atal Pension Yojana endorser has to contribute regularly on monthly basis during the complete course of the year. Only then the Government of India will credit 50 percent of the monthly contribution paid to the account of the subscriber.
The State Government is also legitimate to offer a supplementary co-contribution to AYP endorsers, in their particular states. As needed, the Pension Fund Regulatory and Development Authority would give the procedure for this, in conferment to the rules set by the Central Government.
Consumers who hold a valid bank account can associate with the Atal Pension Yojana plan and make use of the auto-debit facility to make a payment on a half-yearly, quarterly, and monthly basis. The endorser must maintain the prescribed balance in the savings bank account, to make a payment on the due date, to escape the penalty for late payments. The due date to contribute on monthly basis is determined based upon the amount of the first monthly contribution. If the endorser does not make payment of the monthly contributions on regular basis, then the AYP account can be closed and the amount of contribution of the Government of India will be penalized. Any incorrect proclamation done in regard to the subscriber’s eligibility will lead to the entire amount of the contribution by the Government and the interest being penalized. You would have to submit the primary KYC documents to identify the spouse, nominees, and beneficiaries to prevent any conflicts. Every endorser has to choose an amount of pension between Rs. 1000 and Rs. 5000 and also ensure that the contributions are done accurately. The Atal Pension Yojana plan also provides adaptability to endorsers can boost or decline the amount of monthly pension, when they contribute. If an Atal Pension Yojana subscriber wants to change the fixed pension amount, then he can do it once in a year, i.e. in April. Once an endorser joins the APY plan, he will be provided with an acknowledgment receipt by the bank, which will contain the details such as the monthly contribution, PRAN, and guaranteed pension amount.
The Government of India provides the Atal Yojana Scheme and Pension Fund Regulatory and Development Authority (PFRDA) administers it. The APY scheme consists of the National Pension System’s institutional architecture to enroll new endorsers. The account opening form and the offer document of the Atal Pension Yojana scheme are formulated by PFRDA.
Aggregators under the service providers (Points of Presence-POP) and the Swavalamban Plan would get enrolled through the architecture of the National Pension System. Banks, being the POPs or the aggregators can employ micro insurance agents, mutual fund agents, BCs, non-banking aggregators to be the facilitators for the activities linked with operations. Banks are also permitted to share the incentives they get regarding this scheme from the PFRDA or the Government of India, as they find them fit.
The Government of India offers a guaranteed fixed pension to the endorsers co-contributes 50% of the total additional amount, annually and also compensates the cost of promotional and developmental activities together with the incentives for making the contribution collection agencies.
The Atal Pension Yojana plan needs subscribers to contribute regularly on monthly basis without any halt in the payments. If the endorser does not pay the premium regularly or stops contributing, then the related bank can impose penalty charges as fixed by the Government. The extra penalty charges that are imposed range from Re. 1 to Rs. 10 each month. This fixed amount of penalty or the interest must be a portion of the corpus of pension of the one who contributes.
If the amount of contribution is up to Rs. 100, then the amount of penalty would be Re. 1, each month.
If the amount of contribution is between Rs. 101 and Rs. 500, then the amount of penalty would be Rs. 2 each month.
If the amount of contribution is between Rs. 501 and Rs. 1000, then the amount of penalty would be Rs. 5 each month.
If the amount of contribution is more than Rs. 1001, then the amount of penalty would be Rs. 10 each month.
On the accounts of Atal Pension Yojana where the payments are suspended the measures mentioned below will be taken:
If the payments are not made for 6 months, the account of the subscriber would get frozen.
If the subscriber does not make payment for twelve months his account would get deactivated.
If the subscriber does not make payment for twenty-four months his account would be closed permanently.
To steer clear of late or delayed payments, the module of Atal Pension Yojana will continuously raise demand with the subscriber on the due date, until he makes the payment. The contribution made on monthly basis is recovered usually on day one of the calendar month and the concerned bank will also be permitted to regain the necessary contribution amount on any day of the month. The amount of monthly contribution will be received on FIFO basis, i.e. the earlier due amount will be received first together with the fixed penalty charges. The concerned bank also has an option to recover more than a single contribution in a month, provided that the subscriber has the necessary funds. The bank will receive together with the fixed due amount monthly.
The Atal Pension Yojana account opening form can be easily availed offline from the nearby bank branch that participates in the scheme. However, the subscribers can also download the form for free from the official website of the Pension Fund Regulatory and Development Authority (PFRDA). Alternatively, the APY subscription form can be also availed from different banking websites that include all the public and private sector major banks operating in India.
The following steps should be followed to avail of the benefits of the Atal Pension Yojana Scheme
Step 1: APY scheme is offered by all nationalized banks. The individuals can visit the bank's branch office for the atal pension yojana registration and open an account.
Step 2: The APY application form can be availed online by visiting the official website of the bank or from the website of PFRDA. The subscribers can download the atal pension yojana application form from the website.
Step 3: The application form is available in different languages like Tamil, English, Telegu, Bangla, Marathi, Odia, Gujarati, and Kannada.
Step 4: The atal pension yojana online form must be filled properly and submitted at the bank.
Step 5: Along with the thoroughly filled form, the subscriber will need to provide a valid mobile number and a photocopy of the Aadhaar card.
Step 6: Upon approval of the atal pension yojana application form, the individual will receive a confirmation message.
The subscriber form of Atal Pension Yojana is made available online on the websites of banks and another third party. Consumers just have to download the subscriber form, fill-in, and the necessary details, and submit it to their respective banks. Other mandatory documents also have to be attached and the applicants can get their Atal Pension Yojana account open easily. You cannot make direct applications for the APY scheme in India and it is necessary to submit these forms to any of the nearest branches of the bank.
The Atal Pension Yojana Subscriber registration form consists of the following fields that the subscriber or applicant has to fill in:
|Additional Details-If nominee is a minor|
|Bank Account Number||Name of the Applicant||Pension Amount selected-1000/2000/3000/4000/5000||Date of Birth|
|Bank Name||Date of Birth||Monthly Contribution Amount||Name of the Guardian|
|Bank Branch||Email ID||-||Is the minor a beneficiary of other statutory social security schemes?|
|-||Marital Status||-||Is the minor an income tax payer?|
|-||Name of the Spouse||-||-|
|-||Name of the Beneficiary/Nominee||-||-|
|-||Relationship of the subscriber with nominee||-||-|
|-||Aadhaar Card Details for the subscriber, nominee, and spouse||-||-|
The subscriber has to sign Atal Pension Yojana Application form and submit it to the bank. The Atal Pension Scheme form also contains an acknowledgment section by the name “Acknowledgement-Subscriber Registration for Atal Pension Yojana (APY)”, which has to be filled in the respective bank. The applicants do not have to fill this section. The bank will give you back the receipt of acknowledgment once your application gets processed.
NOTE FOR APPLICANT:
A few fields in the application form are marked with a sign of asterisk indicating that all these marked fields have to be necessarily filled. Furthermore, the applicant has to fill the Atal Pension Yojana application form in cursive writing and must be completed by making use of block letters only.
Subscribers of the Atal Pension Yojana can receive alerts on regular basis about the credit of contribution, account balance, and any other activities related to the account, via SMS alerts. Subscribers of Atal Pension Yojana can modify specific details such as phone number, the name of the nominee, address, etc hassle-free whenever they want to do so.
It is necessary to register a valid mobile number under the APY scheme so that the endorsers can be touch via SMS alerts to the respective APY accounts. This will assist in knowing their due dates, arrange their auto-debits, and keep a check on the available balance in the APY accounts.
The amount of contribution you would have to make depends on the age of the member. So, the amount of contribution will be less if one joins early and more if one joins late. Flexible payment options like monthly, quarterly, or half-yearly are available.
Monthly pension of Rs. 3000 and a corpus amount of Rs.5.1 Lakhs
If one joins the scheme at 18 years of age, the contribution amount would be Rs. 126/month and the same will be Rs. 873/month for a 40-year-old.
Monthly pension of Rs. 5000 and a corpus amount of Rs.8.5 lakhs
If one joins the scheme at 25 years of age, the contribution amount would be Rs.376/month and the same will be Rs. 902/month for a 40-year-old.
Likewise, the contribution amount is calculated for people of different age groups depending on the years of contribution and age. One can also opt to increase or decrease the amount of pension but this option would be available once a year in the month of April.
On completion of 60 years, the subscriber will have to submit a request to the bank, to draw the guaranteed pension amount. In case of death of the subscriber, the beneficiary will get the corpus amount and if the beneficiary is not alive at the time of payment, the nominee will get the corpus fund.
Initiated and backed by the Government of India, Atal Pension Plan is for the poor and the underprivileged workers of the unorganized sector. The scheme aims to help them save for old age. Go ahead and educate people around you so that they can avail the maximum benefit of this scheme.
Current subscribers of the Swavalamban plan will be automatically drifted to the Atal Pension Yojana Scheme, with an extra option of selecting to pull out, provided they fulfill the necessary eligibility criteria. The Government’s five-year co-contribution may not, however, outstrip for all the subscribers. For instance, if a current Swavalamban endorser has received a contribution from Government for two years, then under the APY scheme he will get only 3-years of co-contribution from the Government. If any of the existing Swavalamban endorsers wish to choose out of the APY plan, the contribution by the Government will be given only until the years 2016/2017, if they fall under the eligibility criteria. In addition, such endorsers can persist under the National Pension System Swavalamban plan until they attain the exit age.
The movement will be made chiefly for the endorsers who have attained the age of 18 and 40 years. For the sake to make the changes without any commotion, the aggregator will have to assist the progress of the process of migration by offering complete support. Endorsers who want to get move up to the Atal Pension Yojana plan can also get hold of the nearest bank to be a shift from a Swavalamban account to an Atal Pension Yojana account that contains Permanent Retirement Account Number (PRAN) details.
The subscribers of Swavalamban who have attained an age beyond 40 can also choose to abandon the Swavalamban plan by entirely withdrawing the complete amount, all-encompassing of the principal amount, and the earned interest on it. Alternatively, they can opt to continue until they attain an age of 60 years, so as to fall under the eligibility criteria to get the annuities.
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