Atal Pension Yojana (APY), a pension scheme for citizens of India is focused on the unorganized sector workers. Under the APY , guaranteed minimum pension of Rs. 1,000/- or 2,000/- or 3,000/- or 4,000 or 5,000/- per month will be given at the age of 60 years depending on the contributions by the subscribers. Any Citizen of India can join APY scheme. Following are the eligibility criteria:
The prospective applicant may provide Aadhaar and mobile number to the bank during registration to facilitate receipt of periodic updates on APY account. However, Aadhaar is not mandatory for enrollment.
Need for Pension
A Pension provides people with a monthly income when they are no longer earning.
The co-contribution of the Government of India is available for 5 years, i.e., from the Financial Year 2015-16 to 2019-20 for the subscribers, who join the scheme during the period from 1 st June, 2015 to 31 st March, 2016 and who are not covered by any Statutory Social Security Scheme and are not income tax payers. The Government co-contribution is payable to eligible Permanent Retirement Account Number (PRANs) by the Pension Fund regulatory and Development Authority (PFRDA) after receiving the confirmation from Central Record Keeping Agency to the effect that the subscriber has paid all the installments 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 financial year .The beneficiaries, who are covered under statutory social security schemes, are not eligible to receive Government co-contribution under APY . For example, members of the Social Security Schemes under the following enactments would not be eligible to receive Government co-contribution under APY :
Benefits of APY
The benefit of minimum pension under Atal Pension Yojana would be guaranteed by the Government in the sense that if the actual realized returns on the pension contributions are less than the assumed returns for minimum guaranteed pension, over the period of contribution, such shortfall shall be funded by the Government. On the other hand, if the actual returns on the pension contributions are higher than the assumed returns for minimum guaranteed pension, over the period of contribution, such excess shall be credited to the subscriber’s account, resulting in enhanced scheme benefits to the subscribers.
The Government would also co-contribute 50% of the total contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber, who joins the scheme during the period 1 st June, 2015 to 31 st March, 2016 and who is not a beneficiary of any social security scheme and is not an income tax payer. The Government co-contribution will be given for 5 years from the Financial Year 2015-16 to 2019-20.
At present, a subscriber under the National Pension System (NPS) is eligible to get tax benefit for the contribution, up to a ceiling, and even for the investment returns on such contributions. Further, the purchase price of the annuity on exit from NPS is also not taxed and only the pension income of the subscribers are considered to be part of normal income and taxed at the appropriate marginal rate of tax, applicable to the subscriber. Similar tax treatment is applicable to the subscribers of APY .
Procedure for Opening an APY Account
Mode of contribution, how to contribute, and due date of contribution
The contributions can be made at monthly/quarterly/half yearly intervals through auto-debit facility from savings bank account/post office savings bank account of the subscriber. The monthly/quarterly/half yearly contribution depends upon the intended/desired monthly pension and the age of subscriber at entry. The contribution may be paid to APY through savings bank account/ post office savings bank account on any date of the particular month, in case of monthly contributions or any day of the first month of the quarter, in case of quarterly contributions or any day of the first month of the half year, in case of half-yearly contributions.
In case of continuous default
The subscribers should keep the required balance in their savings bank accounts/post office savings bank account on the stipulated due dates to avoid any overdue interest for delayed contributions. The monthly/quarterly/half-yearly contribution may be deposited on the first date of month/quarter/half year in the savings bank account/ post office savings bank account. However, if there is inadequate balance in the saving bank account/post office savings bank account of the subscriber till the last date of the month/last date of the first month in a quarter/last day of the first month in a half year, it will be treated as a default and contribution will have to be paid in the subsequent month along with overdue interest for delayed contributions. Banks are required to collect Rs. 1 per month for contribution of every Rs. 100, or part thereof, for each delayed monthly contributions. Overdue interest for delayed contribution for quarterly/half yearly mode of contribution shall be recovered accordingly. The overdue interest amount collected will remain as part of the pension corpus of the subscriber. More than one monthly/quarterly/half yearly contribution can be recovered subject to availability of the funds. In all cases, the contribution is to be recovered along with the overdue charges if any. This will be bank's internal process. The due amount will be recovered as and when funds are available in the account.
Deduction would be made in the subscribers account for account maintenance charges and other related charges on a periodic basis. For those subscribers, who have availed Government co-contribution, the account would be treated as becoming zero when the subscriber corpus minus the Government co-contribution would be equal to the account maintenance charges, fees and overdue interest and hence the net corpus becomes zero. In this case, the Government co-contribution would be given back to the Government.
Withdrawal procedure from APY
Other important facts
