By The Buyt desk
The Atal Pension Yojna(APY) was launched by the Government of India in 2015. It is a guaranteed pension scheme for the people working in the unorganised sector. The aim is to provide a financial safety net to those who can’t afford it. The unorganised workforce like gardener, drivers, maids who are dependent on daily wages can take advantage of APY to fulfil their financial needs after their retirement.
Every individual wants to save for his/her old age. But those in the non-fixed income category may either not have many options to save and not a big saving to invest. For them, a government pension scheme APY offers its subscribers a pension in the range of Rs 1000 to Rs 5000 every month. The pension begins after the subscriber has achieved the age of 60 years. APY is administered by the Pension Regulatory and Development Authority(PFRDA).
Rules of Government contribution
The Government co-contributes for 5 years, i.e., if someone joined the scheme in June 2015, then the government will contribute from the Financial Year 2015-16 to 2019-20 for the subscribers. A mandatory condition is that the subscriber should not be covered by any Statutory Social Security Scheme such as he/she should not be a part of an EPF scheme and are not income taxpayers. The Government co-contribution is payable to eligible Permanent Retirement Account Number (PRANs) by the PFRDA after receiving the confirmation from Central Record Keeping Agency to the effect that the subscriber has paid all the instalments for the year. Government co-contribution will be credited in subscriber’s savings bank account/ post office savings bank account 50% of the total contribution subject to a maximum of Rs 1000/- at the end of the financial year.
Who can subscribe to the APY scheme?
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All workers who are Indian citizens can approach any bank or post office and can open the pension account. Most of the banks offer the facility to open the account using their online portals.
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The eligible age of the subscriber is 18 years to 40 years. Thus, the subscriber should pay the premium for a minimum of 20 years to build the corpus.
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The subscriber should have a Savings account because APY is linked to a Savings account or Pradhan Mantri Jan Dhan Yojna Account. The subscriber can give instructions to deduct the premium amount from the Savings account.
Which documents are required?
Since the scheme aims to strengthen the economically weaker sections of our society, the account opening procedure is easy and hassle-free. The only document needed for Know Your Customer (KYC) documentation is the Aadhar Card (Aadhar ID Number) of beneficiaries, spouses or nominees. The subscriber can provide a copy of the ration card or the bank passbook as the address proof.
3 Steps to open APY account
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Visit the bank branch/post office where the individual’s savings bank account exists or open a savings account if the subscriber doesn’t have one.
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You have o fill the APY registration form
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Provide Aadhaar/Mobile Number
Premium Amount
At the time of applying for the pension scheme, the subscriber has to decide about the pension amount that he wants to accrue at the time of retirement. It could be Rs.1000 and its multiples up to Rs.5000 per month. The amount of pension desired by the subscriber decides the premium amount. The subscriber can deposit it on a monthly, quarterly or half-yearly basis.
This can be illustrated with an example. A 25 years old individual has to pay the premium amount for 35 years. Now, if he wants Rs.1000 as the monthly pension, Rs.76 will be the monthly premium amount. Similarly, to get a pension of Rs.2000, he will have to pay Rs.151.
The amount to be obtained as pension can also be decreased or increased during the accumulation phase once a year in the month of April.
Penalty on default
In case, the subscriber is not able to pay the premium or there is a delay in the payment then a penalty may apply. The account will be frozen, deactivated, and closed if the default is for 6 months, 12 months, and 24 months respectively. There is a penalty of Re.1 per month for the contribution of every Rs.100, or part thereof, for each delayed monthly contribution.
Withdrawal Procedure
The subscriber, on attaining the age of 60 years, can approach the bank or post office and apply for disbursement of the pension. In case of death of the subscriber, the spouse (default nominee) will receive the same amount of pension. In case of death of both the subscriber and his/her spouse, the nominee receives the amount.
