Atal Pension Yojana (APY) is a pension scheme for the citizens of India focused on workers in the unorganized sector. Under APY, a guaranteed minimum pension of Rs. 1,000/- or 2,000/- or 3000/- or 4000 or 5000/- per month at the age of 60 years will be guaranteed depending on the contribution by the subscribers. Any citizen of India can join the APY scheme. It has the following eligibility criteria:
The age of the customer should be between 18 to 40 years
He should have a savings bank account with the post office/savings bank
The prospective applicant may provide the Aadhar and mobile number to the Bank during registration to facilitate the receipt of periodic updates to the APY Account. However, Aadhar card is not mandatory for enrolment.
Pension Requirement:-
A pension provides a monthly income to people when they are not earning.
Earning potential declines with age
Rise of the Nuclear Family – Escape of the Earning Member
increase in cost of living
increase in longevity
Fixed monthly income ensures a dignified life in old age
Benefits of APY:-
- The minimum pension under Atal Pension Yojana will be guaranteed by the Government in the sense that if the actual return on pension contribution falls short during the period of contribution, such reduction will be funded by the Government. On the other hand, if the actual returns on pension contributions are higher than the returns over the period of contribution for minimum guaranteed pension, then such additional benefit will be credited to the subscriber’s account thereby providing enhanced plan benefits to the subscribers.
- The government will co-contribute 50% of the total contribution or Rs. 1000 per annum, whichever is less, to each eligible subscriber who joins the scheme between 1st June 2015 to 31st March 2016 and is a member of any other social security scheme. Not a beneficiary and not an income tax payer. Government co-contribution will be given for 5 years from the financial year 2015-16 to 2019-20.
- At present, the subscriber under the National Pension System (NPS) is eligible for tax benefits for contributions and investment returns thereon. Further, the purchase price of the annuity on exit from NPS is also not taxed and only the pension income of the subscriber is treated as part of the ordinary income at the appropriate marginal rate applicable to the subscriber. Similar tax treatment is applicable for customers of APY.
Procedure for opening APY account
Contact the bank branch/post office where the individual has a savings bank account or open a new savings account if the account is not there
Provide bank/post office savings bank account number and fill up APY registration form with the help of bank staff
Provide Aadhar/Mobile Number. This is not mandatory, but may be provided to facilitate communication about the contribution.
Ensure to keep required amount in savings bank account/post office savings bank account for transfer of monthly/quarterly/half yearly contribution
Mode of Contribution, How to Contribute and Due Date of Contribution
Contribution can be made at monthly / quarterly / half yearly intervals from the savings bank account / post office savings bank account of the customer through auto debit facility. Monthly / Quarterly / Half yearly contribution depends on the desired monthly pension and the age of the subscriber at the time of admission. Contribution towards APY can be paid through Savings Bank Account/Post Office Savings Bank Account on any particular date of the month, on any day of the first month in the case of monthly contributions or on any day of the first month of the quarter in the case of quarterly contributions or on any day of the first half of the month in the case of semi-annual contributions.
In case of continuous default
Customers should keep sufficient amount in their Savings Bank Accounts/Post Office Savings Bank Account to avoid any overdue interest towards due date delayed contribution. Monthly / Quarterly / Half yearly Contribution can be deposited in the Savings Bank Account / Post Office Savings Bank Account on the 1st of the month / quarter / half yearly. However, if the customer’s savings bank account/post office savings bank account has insufficient closing balance on the last day of the first month/last day of the first quarter/first half So it will be treated as a default and delayed contribution will have to be paid in the next month along with overdue interest. Banks are to charge Re 1 per month of delay for every Rs 100 for each delayed monthly contribution. Overdue interest for delayed contribution for quarterly/half yearly mode of contribution will be recovered.
The amount of outstanding interest collected will remain as part of the pension corpus of the subscriber. More than one monthly/quarterly/half yearly contribution can be taken subject to availability of funds. In all cases, the contribution, if any, can be credited along with the overdue amount. This will be an internal process of the bank. The amount due will be recovered as per the funds available in the account.
Maintenance charges and other related charges will be deducted from the customer’s account on a periodic basis. For customers who have availed Government co-contribution, the amount in the account shall be treated as zero when the amount equals to maintenance charges, fees and overdue interest on deducting from the subscriber corpus and Government co-contribution account and hence Net fund becomes zero. In this case the co-contribution of the government will be given back to the government.
Withdrawal process from APY
On attaining the age of 60 years:- At the end of 60 years, the subscriber shall to the concerned bank for withdrawal of guaranteed minimum monthly pension or higher monthly pension, if the investment returns are higher than the guaranteed returns embedded in the APY. An equal amount of monthly pension is payable to the spouse (named defaulter) on the death of the subscriber. On the death of both the nominated subscriber and the spouse, the pension money accumulated till the age of 60 years will be eligible for refund.
In case of death of the subscriber due to any cause after the age of 60 years:- In case of death of the subscriber, the same pension is payable to the spouse and on the death of both (the subscriber and the spouse) the same pension shall reach the age of 60 years. The pension money accumulated till age will be returned to the nominee.
Exit before the age of 60 years:- If a subscriber, who has availed Government co-contribution under APY, chooses to exit APY voluntarily in future, he/she will only get the contribution made by him in the APY. The net actual earned income earned on the contribution will be refunded after deducting the account maintenance charges. Government co-contribution, and income earned on Government co-contribution, shall not be refunded to such customers.
Death of the subscriber before the age of 60 years:-
In case of death of the subscriber before the age of 60 years, the option to continue the vested contribution in his own name will be available with the spouse for the period remaining in the APY account till the original subscriber attains the age of 60 years. The spouse of the subscriber shall be entitled to receive the same pension amount on death as was payable to the subscriber.
Or, the entire accumulated fund under APY will be returned to the spouse/nominee.
Other important facts
It is mandatory to provide enrolment details in APY account. If the subscriber is married, the spouse will be the default nominee. Unmarried customers can nominate any other person as nominee but after marriage they have to provide the details of the spouse. Aadhar details of spouse and nominee can be provided.
A customer can open only one APY account and it is unique. Multiple accounts are not allowed.
A subscriber can choose to increase or decrease the pension amount once during a year.
APY customers will be informed from time to time through SMS alerts regarding activation of PRAN, account balance, contribution credit etc. The physical statement of account will also be given to the customer once in a year.
Annual physical details of APY will also be provided to the customers.
Contribution can also be remitted through auto debit without interruption in case of change of residence/location.
The scheme is only for Indian citizens.
Customer can change the mode (monthly/quarterly/half yearly) of auto debit facility once in a year during the month of April.
So, finally about APY and its benefits are cleared and if you have any doubts or query then you can post your feedback.
