Atal Pension Yojana is a pension plan focused on providing pension benefits to the unorganised sector
With rising unemployment and limited opportunities, many people have found work in the unorganised sector, but often lacking the necessary skills needed for jobs in a fast-paced and rapidly-changing technology-driven world. Workers in the unorganised sector often faced economic insecurity and uncertainty of jobs as a result of these fast technical advancements. The Atal Pension Yojana (APY) was implemented by the government to help these workers.
APY, named after former Prime Minister Atal Bihari Vajpayee, was started in 2015 and is intended for employees in the unorganised sector who do not have statutory pension plans. It encourages people, such as housekeepers, gardeners, and drivers to actively save for their retirement. The Pension Fund Regulatory and Development Authority of India (PFRDA) regulates this system, which was created as an extension of the Swavalamban system, which had limited impact and reach.
APY seeks to provide better retirement for those in the informal sector through early savings. Its primary purpose is to provide financial stability for older persons, thus allowing them to enjoy their retirement without worrying about unexpected bills. Regular payments are made to the pension account under the APY plan. The pension start at age 60 and is paid every month based on one’s contribution, which can be vary from Rs 1,000 to Rs 5,000.
Age Requirement: Subscribers must be at least 18 years old and no older than 40 years of age.
Bank Account: One needs to have a savings account with a bank or a post office.
Citizenship: Any Indian citizen can participate in APY.
Aadhaar Card: The Aadhaar card must be connected to the bank account designated for usage within this scheme.
There are two modes to apply for APY – online and offline.
Online Mode: Here are the steps.
1] Find out whether your bank provides this online service.
2] Use your Netbanking facility to open an APY account.
3] Log in to your Netbanking and search for APY.
4] Select the auto-debit option to have contributions debited automatically until you reach the age of 60.
Offline Mode: Here are the steps for the offline mode.
1] Visit your bank or post office to get the APY form.
2] Fill out the form and attach a photocopy of your Aadhaar card and submit it.
3] Following application processing, the bank will issue an acknowledgment receipt.
4] You will receive a confirmation message to your registered mobile number after authorised so make sure you supply the proper number.
Here are the benefits of the scheme.
Guaranteed Pension: Receive a pension of Rs 1,000-5,000 per month from age 60, based on your contribution.
Tax Benefits: Contributions are tax-deductible under Section 80CCD(1) of the Income-tax Act, 1961.
Death Benefit: Spouse receives the pension and nominee gets the corpus if both subscriber and spouse pass away.
Exit Option: There is an option for early exit after 10 years with accumulated corpus and interest.
Applicability: APY is also available to private sector employees.
Automatic Debit: Contributions are automatically debited from the linked bank account.
Penalty On Defaults
If you fail to contribute towards the scheme regularly, your bank will collect additional amounts as follows:
Re. 1 per month for contributions up to Rs 100 per month.
Rs. 2 per month for contributions between Rs 101 and Rs 500 per month.
Rs. 5 per month for contributions between Rs 501 and Rs 1,000 per month.
Rs.10 per month for contributions beyond Rs 1,001 per month.