Atal Pension Yojana (APY) is a government of India initiative to protect the interests of the employees in the unorganized sectors. This social security measure provides a pension to the subscribers when they turn 60. Pension benefits continue after the subscriber’s demise for the spouse, and the nominee receives the accumulated corpus after both are no more. The scheme’s administration is vested with the PFRDAI (Pension Fund Regulator and Development Authority of India), delivering a guaranteed pension after retirement.
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The scheme delivers old-age pensions to the hitherto uncovered employees in India’s vast unorganized sector. However, from June 2015 onwards, nearly 88% of the 47.29 Cr among the large labor force are eligible to subscribe to the scheme. Accordingly, you can opt to subscribe to a fixed pension of Rs.1000, Rs. 2000, Rs.3000, Rs.4000, and Rs.5000 against a monthly contribution through a bank account. In addition, the government of India contributes a share of the corpus for the benefit of the subscribers.
The tables below indicate the monthly premium you need to contribute to earning the target pension upon exit. The monthly premium depends on the entry age and the target pension, factoring in the number of years you can contribute. Most importantly, note that the subscriber and spouse earn the monthly pension income, while the nominee receives the accumulated corpus in their absence.
Table 1: The grid depicts the monthly premium when the target pension is Rs.1000, with the final corpus payable to the nominee.
Joining age* | Maximum Term* | Premium (Rs)# | Pension (Rs.)@ | Corpus (Rs)$ |
18 | 42 | 42 | 1000 | 1.7 Lac |
20 | 40 | 50 | 1000 | 1.7 Lac |
25 | 35 | 76 | 1000 | 1.7 Lac |
30 | 30 | 116 | 1000 | 1.7 Lac |
35 | 25 | 181 | 1000 | 1.7 Lac |
40 | 20 | 291 | 1000 | 1.7 Lac |
Legend: | ||||
* | In Years | |||
# | Per month | |||
@ | Per month payable to the subscriber and the spouse | |||
$ | Payable to the nominee |
Table 2: The grid depicts the monthly premium when the target pension is Rs.2000, with the final corpus payable to the nominee.
Joining age* | Maximum Term* | Premium (Rs)# | Pension (Rs.)@ | Corpus (Rs)$ |
18 | 42 | 84 | 2000 | 3.4 Lac |
20 | 40 | 100 | 2000 | 3.4 Lac |
25 | 35 | 151 | 2000 | 3.4 Lac |
30 | 30 | 232 | 2000 | 3.4 Lac |
35 | 25 | 362 | 2000 | 3.4 Lac |
40 | 20 | 582 | 2000 | 3.4 Lac |
Legend: | ||||
* | In Years | |||
# | Per month | |||
@ | Per month payable to the subscriber and the spouse | |||
$ | Payable to the nominee |
Table 3: The grid depicts the monthly premium when the target pension is Rs.3000, with the final corpus payable to the nominee.
Joining age* | Maximum Term* | Premium (Rs)# | Pension (Rs.)@ | Corpus (Rs)$ |
18 | 42 | 126 | 3000 | 5.1 Lac |
20 | 40 | 150 | 3000 | 5.1 Lac |
25 | 35 | 226 | 3000 | 5.1 Lac |
30 | 30 | 347 | 3000 | 5.1 Lac |
35 | 25 | 543 | 3000 | 5.1 Lac |
40 | 20 | 873 | 3000 | 5.1 Lac |
Legend: | ||||
* | In Years | |||
# | Per month | |||
@ | Per month payable to the subscriber and the spouse | |||
$ | Payable to the nominee |
Table 4: The grid depicts the monthly premium when the target pension is Rs.4000, with the final corpus payable to the nominee.
Joining age* | Maximum Term* | Premium (Rs)# | Pension (Rs.)@ | Corpus (Rs)$ |
18 | 42 | 168 | 4000 | 6.8 Lac |
20 | 40 | 198 | 4000 | 6.8 Lac |
25 | 35 | 301 | 4000 | 6.8 Lac |
30 | 30 | 462 | 4000 | 6.8 Lac |
35 | 25 | 722 | 4000 | 6.8 Lac |
40 | 20 | 1164 | 4000 | 6.8 Lac |
Legend: | ||||
* | In Years | |||
# | Per month | |||
@ | Per month payable to the subscriber and the spouse | |||
$ | Payable to the nominee |
Table 5: The grid depicts the monthly premium when the target pension is Rs.5000, with the final corpus payable to the nominee.
Joining age* | Maximum Term* | Premium (Rs)# | Pension (Rs.)@ | Corpus (Rs)$ |
18 | 42 | 210 | 5000 | 8.5 Lac |
20 | 40 | 248 | 5000 | 8.5 Lac |
25 | 35 | 376 | 5000 | 8.5 Lac |
30 | 30 | 577 | 5000 | 8.5 Lac |
35 | 25 | 902 | 5000 | 8.5 Lac |
40 | 20 | 1454 | 5000 | 8.5 Lac |
Legend: | ||||
* | In Years | |||
# | Per month | |||
@ | Per month payable to the subscriber and the spouse | |||
$ | Payable to the nominee |
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All the Swabalamban Yojana Point of Presence (Service Providers) and aggregators shall enroll APY subscribers. In addition, banks are the authorized agencies for dispensing the scheme under the NPS architecture.
You can enroll for APY by submitting the application form to any bank where you hold a KYC-compliant account. You can download the form and carry a self-attested Aadhaar card copy as the primary enrolment document. Check the following for a successful subscription.
Authorize the bank to directly debit your account in monthly, quarterly, and half-yearly frequencies.
The due auto-debit depends on the date of enrollment and the first day or any other day of the calendar month.
Several banks like SBI, Axis, and ICICI allow online enrolment to the APY subscribers.
If eligible, all existing Swavabalamban subscribers can migrate to the APY by default. However, they have an option for opting out. So, check out the following rules.
Since the government’s contribution to APY continues for 5-years, migrant subscribers will enjoy the facility for the residual period only. For example, if the benefit received is 1-year earlier, the APY benefit continues for another 4-years.
However, Swavabalamban migrants opting out will receive the benefit until 2016-17.
Swabalamban subscribers beyond 40 years can exit the scheme and receive the corpus in a lump sum. On the other hand, they can continue up to 60 years to enjoy the benefit of annuities.
The default contribution under the APY for individual subscribers is monthly. However, banks collect an additional amount if the account holder fails to maintain a sufficient balance for the auto-debit. The additional amount recovered on account of default varies from Rs.1 to Rs. 10 per the grid below.
Contribution Amount (Rs) per Month | Penalty (Rs) per Month |
Up to 100 | 1 |
101 to 500 | 2 |
501 to 1000 | 5 |
Beyond 1001 | 10 |
The fixed penalty amount remains a part of the pension corpus. |
On the other hand, discontinuation of payment leads to the following outcome.
Discontinuation Duration | Outcome |
After 6-months | Account is Frozen |
After 12-months | Account is deactivated |
After 24-months | Account is closed |
The Atal Pension Yojana reveals the government’s concern toward the workers in the unorganized sector, the significant component of the Indian labor force. It ensures their financial stability in old age with a fixed pension of up to Rs.5000 per month. In addition, the spouse enjoys the same benefit in the subscriber’s absence, while the nominee earns the legacy of the accumulated corpus in a lump sum.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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