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What does Atal Pension Yojana offer?

Author: Team Finapolis/Tuesday, March 6, 2018/Categories: Financial Planning

What does Atal Pension Yojana offer?

The Atal Pension Yojana was introduced by the government in June 2015. It was administered by the PFRDA (Pension Fund Regulatory and Development Authority) under the NPS (National Pension Scheme). The scheme was introduced with the objective of encouraging pension funds among the lower middle class section. Additionally, the scheme can also be availed by individuals working in the private sector, as well as those who are self employed. This scheme replaces the ‘Swavalamban Yojana NPS Lite’, a scheme of the government’s that is not gain much popularity. All existing members of the previous scheme will be migrated to the new one.

Who is eligible for APY?

This scheme is open to all Indians from the ages of 18 to 40 years. As the corpus is reaped at the age of 60, 40 years is kept as the upper age limit as an individual can at least contribute for 20 years to the fund. Any bank account holder who is not a member of any statutory social security scheme is eligible for apply for APY.

For the first 5 years of holding the account, the central government will also contribute 50% of the total contribution or Rs 1000 per annum, whichever is cheaper to each eligible subscriber. The exit age of the scheme is 60 years.

How to enroll for the scheme?

The account holder must fill and submit an authorised form to the bank. The form will contain details including account number, spouse and nominee details, and consent for auto debit of contribution amount. The account holder must maintain sufficient funds for the money to be auto debited. If no payment is made towards the scheme for 6 months, the account is frozen. If 12 months later too no activity is detected the account is deactivated. 24 months later the account will be automatically closed.

Once an individual has enrolled in the scheme, they are not allowed to exit the scheme before the age of 60. The only circumstance where it is possible is in the event of death of the beneficiary. The corpus collected in the account is then passed on to the nominee.

Launch of APY

The scheme was launched on May 9, 2015, simultaneously, by State and Union Ministers. Within 2 months of the launch, Finance Ministry recorded as many as 30 lakhs registrations with 5,000 new registrations every day. The latest figures show that the number of subscribers to the yojana has increased to 69 lakh and is expected to hit 1 crore in March 2018.

APY monthly premium plans

APY offers 5 monthly premium plans to its subscribers. The plans vary depending upon the fixed pension amount they wish to receive. Subscriber an choose among Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000 and Rs 5,000 plans. Depending upon the money contributed monthly, one gets the pension amount every month after closure of the account.

Here is an example of a table demonstrating how to get Rs 1,000 as fixed pension and the amount that must be invested for it:

Joining Age of Subscriber

No. Of Years (Contribution)

Monthly Contribution Amount

Monthly Fixed Pension Amount

18

42

Rs. 42

Rs. 1000

20

40

Rs. 50

Rs. 1000

25

35

Rs. 76

Rs. 1000

30

30

Rs. 116

Rs. 1000

35

25

Rs. 181

Rs. 1000

40

20

Rs. 291

Rs. 1000

 

Recent developments

To increase the number of subscribers, the government has made APY available in post offices in across the country. This implementation of the scheme through the post office is also expected to benefit people from rural India.

When the scheme was introduced, its clause stated that upon the death of the beneficiary, the account would be closed and money would be transferred to the spouse. In the amendment made in March 2016, it gives the spouse of the beneficiary the option to continue contributing to the account. 

The PFRDA, in August 2016, integrated the APY module with the core banking system to allow enrollments to happen through savings account. The process thus became faster and hassle-free. It also eliminates the need of submitting a physical form, as a web based registration portal has been implemented. 

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rajyashree guha

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