Understanding Atal Pension Yojana

By Author: Neha Sharma
Total Articles: 170
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A vast majority of the Indian population remained beyond the ambit of the banking network and pension schemes, rendering available benefits unreachable.

After the original launch in 2010, the Atal Pension Yojana (APY), previously known as Swavalamban Yojana, was re-launched in 2011, with the Govt. of India focussing on extending coverage to the underprivileged unorganised sector to ensure a sense of security during illnesses and accidents in old age. This scheme is also available to private sector employees.

The APY is open to individuals between the ages of 18 and 40 years, and pension starts at 60 years, fixing the minimum contribution period of the subscriber at 20 years. Based on the individual's age and contribution amount, the pension amount is determined. On the Govt's part, there is a co-contribution of 50% of the total contribution, or ₹1000/-, or whichever is lower. The subscriber is allowed to switch to an increase or decrease of the premium but just once a year.

APY is linked to Pradhan Mantri Jan Dhan Yojana which enfolds a large chunk of the population and makes banking benefits available ...
... on opening a zero-balance account.

This scheme requires the individual to be a citizen of India and his Aadhaar ID number, being the primary document for identification of beneficiaries, spouses and nominees, needs to be linked to his account. Either the Bank Pass Book or his Ration Card suffices as proof of address. Registration of a valid mobile number is also necessary to receive SMS alerts.

Under this scheme, the subscriber, post retirement, gets entitled to pension ranging from ₹1000/- to ₹5000/-, but during the accumulation period he has to ensure regular payment of his pre-determined monthly contribution through his APY account, defaulting on which leads to a penalty, and a continuing default for 12 months may result in closing of the account altogether, the remaining amount being returnable to him.

Other than death or a terminal illness, when the subscriber or nominee gets back the entire amount, early withdrawals are not permitted. In the event of closing of an account before the subscriber attains 60 years of age, his part of the contribution would be returned with interest earned but not the Govt's part of the contribution or interest thereon. Also important is that the subscriber must not be either a part of any social security scheme or fall in the income tax-paying category.

At present, there is no provision for an APY account online, but all nationalised banks provide the scheme. To conclude, it must be added that the Atal Pension Yojana is a well-established pension scheme passed by the Parliament of India, and, so, a discontinuation with a change in government need not be a fear in any form.

Author bio:
Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching about the Atal Pension Yojana. Through her work, she explains the in detail about the same.