New Delhi: To address the longevity risks among workers like daily wage-earners, maids and drivers in the unorganised sector and to encourage them to voluntarily save for their retirement, the government in Budget 2015-16 announced the introduction of a universal social security scheme ‘Atal Pension Yojana’ (APY) for all Indians.
The scheme offers subscribers a fixed minimum pension of between ₹ 1,000 and ₹ 5,000 per month from the age of 60 years, depending on their contribution, which in turn is based on the age of joining the scheme. The benefit of a fixed minimum pension is guaranteed by the government.
The scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) through the National Pension Scheme (NPS) architecture.
Who can join the scheme?
The scheme is open to all citizens of India aged 18-40 years.
Essential requirements for the scheme
You must have a bank account and an Aaadhar number or a valid mobile number.
Is Aadhaar mandatory for joining the scheme?
No, it is not mandatory to provide Aadhaar number for opening an account. Aadhaar is the primary KYC document for identification of beneficiaries, spouse and nominees to avoid pension rights-related disputes in the long term.
Age limit and contribution period
The minimum age of joining the scheme is 18 years and maximum age is 40 years. The age of exit and start of pension is 60 years. Therefore, the minimum period of contribution by the subscriber in the scheme is 20 years.
Benefit of the scheme
Tax benefit: Tax benefit under Sec 80CCD of the Income Tax Act for contributions made.
Guaranteed pension: A guaranteed minimum monthly pension for subscribers ranging between ₹ 1,000 and ₹ 5,000 per month.
Pension for the spouse: In case of death of the subscriber, pension will be paid to the spouse.
Corpus to the nominee: In case of death of the subscriber and the spouse, the nominee will be entitled to receive the corpus that the subscriber had accumulated till 60 years of age.
How to apply for the scheme
Online application: The easiest way to open an account in the Atal Pension Scheme is online. All leading banks in the country like SBI, HDFC and ICICI are offering this facility through net banking. You need to visit your bank’s website and follow the given instructions.
Application at a branch: Existing account holders can approach their bank/post office to subscribe to the scheme. They will have to give their account number to the banking staff who will help enroll them. The account holder will have to provide his personal details and those of his nominee, pension amount and frequency. Then sign the one-page form to confirm enrolment.
Contribution to the scheme
Contributions can be made at monthly, quarterly or half yearly intervals from savings bank accounts of subscribers. The first contribution will be debited at the time of enrolment and the subsequent debit will be as per the frequency chosen by the subscriber. The contribution will be deducted from the subscriber’s savings bank account through auto debit facility.
The government will co-contribute 50% of the total contribution or Rs1,000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, i.e., from 2015-16 to 2019-20.
Discontinuation of payments:
If a subscriber discontinues payment for 6 months the account will be frozen, after 12 months the account will be deactivated and after 24 months the account will be automatically closed.
Can a subscriber opt to decrease or increase the pension amount?
Subscribers can opt to decrease or increase pension amount during the course of the accumulation phase, as per the available monthly pension amount. However, the switching option shall be provided once in a year during April.
How many APY accounts one can open?
A subscriber can open only one APY account.
Exit and pension payment
Upon completion of 60 years, subscribers will have to submit requests to associated banks for drawing the guaranteed monthly pension.
Exit before 60 years of age is permitted only in exceptional circumstances, i.e., in the event of the death of the beneficiary or terminal disease.