The APY or Atal Pension Yojana is a pension scheme launched by the Government of India. Previously referred to as the Swavalamban Yojana, the plan is for workers of the unorganized sector, including gardeners, drivers, and home maids, etc. The scheme was launched all across the country in June 2015. The older Swavalamban Yojana NPS Lite was not appreciated by the people and hence this new social security plan replaced it.
The PFRDA or the Pension Fund Regulatory and Development Authority will administer the Atal Pension Yojana as well as implement it throughout the country via all the banks.
An online option for registration has also been provided by the PFRDA. People can use the electronic-National Pension System channel or e-NPS to register for the scheme. No physical documentation has to be submitted by people during the process of subscribing for this pension scheme.
What are the eligibility criteria for the Atal Pension Yojana?
Atal Pension Yojana pension scheme is available for all citizens of India who are aged between 18 and 40 years. It is mandatory for people to have a savings account with either a post office or a bank in order to get an Atal Pension Yojana account.
What is the amount that needs to be contributed every month?
All 18 year olds who subscribe to the pension scheme have to contribute anywhere between INR 42 to INR 210 every month. The amount of monthly contribution increases with an increase the subscriber age. This monthly contribution is automatically debited from the registered savings account of the subscriber every month. The amount that is contributed on a monthly basis is determined by the age of the individual at the time of enrolment for the scheme.
The facility of auto debit from the bank account is not mandatory. In case of subscribers who do not opt for the auto debit facility any delay in the monthly contribution will attract an overdue interest charge of INR 1 for every monthly contribution of INR 100, of a percentage that is a percentage of the corpus as mentioned by the administrator PFRDA.
The minimum period for which the subscribers have to continue their contribution to the pension plan is 20 years. The contributions can be made by the subscribers of APY every month, every quarter, or on a half-yearly basis.
Atal Pension Yojana Benefits for income tax
Contribution to the APY pension scheme comes with tax benefits that are similar to tax benefits availed under the National Pension System or NPS. Subscribers can claim the pension scheme contributions under Section 80CCD (1B) of the Income Tax Act. For 2018, the income tax deduction limit under Section 80CCD (1B) is INR 50,000. This is in addition to the INR 1.5 lakhs that can be availed under Section 80C.
The pension payout amount under the APY scheme
The minimum amounts that are paid out under the APY plan are set at INR 1000, INR 2000, INR 3000, INR 4000, and INR 5000 every month. The minimum amount of pension can be selected by subscribers at the time of enrolment and subscription to the pension scheme. The monthly pension amount is paid out to after the subscriber attains the age of 60 years. The pension amount received by the subscriber is dependent on the contribution; higher is the contribution, higher will be the pension amount.
APY: Premature exit
Exit from the APY is not permitted by the PFRDA till the subscriber has reached the age of 60 years. It may also be permitted only during exceptional instances, including the death of the subscriber, or terminal disease, etc.
If the subscriber passes away, then the spouse of the subscriber will receive the monthly pension. The spouse will continue receiving the pension till he/she is alive. After the spouse of the primary subscriber also passes away, then the entire pension that is accumulated and remaining is paid to the person nominated by the subscriber. Additionally, in the instance of the death of the subscriber before the completion of the contribution period, the spouse can choose to continue the monthly contributions for the remaining period.