Atal Pension Yojana (APY) was announced by Government of India during 2015-16 budget. Ever since the Atal Pension Yojana has enabled many Indians to secure their future post-retirement. India is a vast country with huge private sector employees without the benefit of a pension system. The Atal Pension Yojana or Scheme targets this mass for investing during the accumulation phases. Here are the details…
The Atal Pension Yojana scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) through NPS (National Pension System) architecture. Like NPS for the private sector, the investor does not have choices of the fund. It is managed in a fixed asset allocation model similar to government sector employees NPS subscription base.
The Pension Options
The pension amount is fixed Rs 1000, Rs 2000, Rs 3000, Rs 4000 & Rs 5000. These are minimum amounts that are guaranteed. If the scheme has profits more than estimated same will benefit the subscribers. For this, you need to make a monthly/quarterly or half-yearly payment till you attain 60 years of age. Once you reach you start receiving a monthly pension. This continues till your death and after you spouse get the pension. After the death of a spouse, the corpus which you accumulated at 60 years of age is paid to the nominee.
The payment table
Who can apply for Atal Pension Yojana?
The scheme is available only to Indian Citizen, aged between 18 to 40 years. NRIs cannot invest. The applicant should have a valid Savings Bank Account. In case a resident Indian subscriber turns non-resident, the account will be closed and proceeds will be paid to the subscriber.
If you are not subscribed to any PF/EPF scheme the Government will put 50% of your monthly installment subject to a maximum of Rs 1000 for 5 years.
Contributions made by an individual under Atal Pension Yojana are eligible for the deductions under section 80CCD of the Income Tax Act, 1961. Maximum deduction allowed under section 80CCD(1) of the Income Tax Act, 1961 is 10% of gross total income subject to maximum deduction of Rs. 1,50,000 p.a. as specified under section 80CCE of the Income Tax Act.
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The pension will be treated as your income/salary.
How to open an account?
Just approach your bank or post office where you have your saving account. Many private and Public Sector banks are offering this scheme online. You can subscribe in both online or offline mode. Contributions will be online i.e. automatic transfer from your savings account. This will be done on the date of your choice.
Charges and Management Fees for Atal Pension Yojana
Penalties/Charges in case of payment default
How to know balance & other information?
Like NPS, the intimations are provided by NSDL to subscribers regularly through periodical statements and SMS. NSDL website also provided login ID password to avail more information.
Yes, it is compulsory to nominate. For married subscribers, the spouse is the default nominee. The unmarried subscribers can nominate anyone in the family to avail benefits in the case of an untimely death.
Some more facts:
- Only one account can be opened by one subscriber.
- In the case of death before attaining 60 years, the spouse has a choice to overtake that account and continue through her contributions. In case he/she doesn’t want to, she can withdraw the accumulated balance.
- One can exit before 60 years in the case of exceptional circumstances like illness. He will only be refunded his contributions, accruals on his contribution minus the maintenance charges.
Word of Advice: If not provided, insist on connecting APY with Aadhar number. Also register spouse Aadhar number too.
All the grievance related to Atal Pension Yojana will be handled by National Securities Depository Limited (NSDL). You can contact them online or offline with any of your queries.
Should You Apply?
Very rarely now you hear the word “Guaranteed” in personal finance. The scheme is good, works at a nominal charge and with easy to service features. But it gives you a pension of Rs 5000 (or maybe a few hundred plus) only. What will be the value of RS 5000/ say after 20 or 35 years? Rs 5000 will be Rs 710 after 40 years at 5% inflation.
Can you rely only on this scheme for your retirement? NO… so you have to invest in other instruments like NPS, Mutual Funds, PPF etc. So is it worth adding another instrument for just Rs 5000 pension after so many years? Or we can increase the contribution in existing schemes? This is the call we have to make.
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