Atal Pension Yojana – Concept, Eligibility, Application, Features, Benefits & more

Back in 2016, the government of India introduced the Atal Pension Yojana. The aim of the scheme is to provide pension benefits to the people in the unorganized sector.

The Pension Funds Regulatory Authority of India regulates and controls the scheme.

Additionally, people from the organized sector with no recourse to pension benefits can also invest in the Atal Pension Scheme.

The scheme allows the individuals to build a retirement corpus for their post-retirement life. The scheme is ideally an extension to the recognized National Pension Scheme.

Ideally, it replaces the previous scheme that is Swavalamban Pension Yojana, as the general population didn’t receive it well.

The accounts opened back in 2015 under the scheme were eligible for co-contributions for five years from the Indian government.

The main aim of the scheme is to mitigate the basic financial obligations of people.

These obligations mainly pop up post-retirement, and you can quickly reduce them if you encourage savings at a young age.

The pension amount primarily depends on your monthly contributions and age.

The individuals who are beneficiaries of the Atal Pension Yojana (APY) mainly receive their accumulated corpus in the form of monthly payments.

Even if the beneficiary passes away, his or her spouse will receive the benefits. If both individuals pass away, then the beneficiary’s nominee can avail of the lump sum amount.

After the successful implementation of Pradhan Mantri Jan Dhan Yojana, the government initiated Atal Pension Yojana.

Well, you must be curious to learn more about it? Don’t worry, and we have got your back.

About Atal Pension Yojana

The Atal Pension Yojana is ideally a pension scheme that aims at the unorganized sector, including maids, gardeners, delivery boys, etc.

The agenda of the scheme is to help all the people across the country, so no individual has to stress about any ailments during their old age.

In simple terms, the scheme gives a sense of security to people. People from the private sector who don’t get pension benefits can also apply for the scheme.

On attaining the age of 60 years, the investors have an option of getting a fixed pension of Rs.1000, Rs.2000, Rs.3000, Rs.4000, or Rs.5000.

The two factors that determine the pension are a person’s age and contribution.

If the pensioner passes away before turning 60, the spouse has an option either to exit the scheme or continue it for the remaining tenure.

Additionally, the government of India also makes an additional contribution of 50% of the total contribution, or Rs.1000 per annum.

The government contributes the lowest amount and is eligible for investors who joined in June 2015.

Additionally, the catch here is the subscribers cannot be a part of any other scheme to avail of this benefit.

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Eligibility Criteria under Atal Pension Yojana

• Individuals must be a citizen of India.
• Individuals must have an active mobile number.
• People must be in the age bracket of 18 and 40 years.
• The bank account should be linked with an Aadhar card.
• An individual cannot be a beneficiary of any other scheme.

Additionally, people are automatically eligible for this scheme if they have been beneficiaries under the Swavalamban Scheme.

How can you apply for Atal Pension Yojana?

Under the Atal Pension Yojana, almost all the banks across the country are eligible to open the account.

• Firstly you need to visit the nearest bank branch in your vicinity.
• Then you need to fill out the form with mandatory details.
• Along with the form, you can submit the photocopies of your Aadhar card.
• Give your active mobile number.

Lastly, you can also download the form from the bank’s official web portal.

Check out all Govt. Savings Scheme available for Investment

Features of Atal Pension Yojana

Here are some of the major features of Atal Pension Scheme –

Automatic Debit

One of the best parts about the scheme is that it offers an automatic debit facility. The beneficiary’s bank account is linked with their pension accounts. Thus the link helps in making automatic debit easy.

Additionally, if you want to avail of this facility, you need to ensure that your account has a sufficient balance.

If you fail to maintain adequate balance, there are chances you might have to pay the penalty.

Facility to enhance contributions

As you know by now, the pension amount mainly depends on the age of the person.  There are a plethora of contributions, which include different pension amounts.

After the age of 60, individuals can avail the pension benefit. Furthermore, individuals can choose to contribute more as per their financial capacity if they want to build a large retirement corpus.

Hence, to facilitate this once in a year government allows an opportunity to increase or decrease the amount of the scheme. It mainly allows this facility to change the corpus amount.

Fixed pension

Individuals can easily choose the periodic pension amount. It mainly depends on their monthly contributions.

The amount can be anything from Rs.1000, Rs.2000, Rs.3000, Rs.4000, to Rs.5000. Age bar- The age bracket under the scheme is 18 to 40 years.

Individuals who fall under this age bracket can invest in Atal Pension Yojana. Hence, even college students can start investing early in their life so they can create a retirement corpus.

The maximum age set for investing under this scheme is 40 years as contributions will be made for 20 years at least.

Withdrawal

After attaining the age of 60, the beneficiaries are eligible to withdraw the money. In simple terms, after turning 60, the beneficiary can annuitize the entire amount under the corpus.

They will receive monthly pensions when the beneficiary’s exit the scheme. You can also exit the scheme before turning 60 if you are ailing from some disease.

If the beneficiary passes away, then the spouse can avail of all the benefits under the scheme. Additionally, the spouse also has an option either to continue or exit the scheme.

Hence, if you choose to exit the scheme before turning 60, you can only avail of the cumulative contributions and interest.

Penalty terms

If you fail to make contributions, there are some penalty charges also applicable.

It includes Re.1 for monthly contributions of Rs.100, Rs.2 for monthly contributions for Rs. 101 and Rs. 500 and Rs.5 for monthly contributions for Rs.501 and Rs.1000.

For monthly contributions above Rs.1001, the penalty chargeable is Rs.10. The accounts become inactive if the default is continuous for more than six months.

Tax Exemptions

Individuals can avail of the tax exemption facility on contributions under Atal Pension Yojana. The exemptions are available under Section 80C of the income tax 1961.

The maximum exemption amount is Rs.1,50,000. Above all, it is advisable to consult a financial expert to learn more about the exemptions available under the scheme.

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Benefits of investing under Atal Pension Yojana

Here are the various benefits of investing in Atal Pension Yojana –

An additional source of income – After the age of 60 or post-retirement, individuals can earn a steady income if they invest in this scheme.

Thus, the scheme enables them to be financially secure, and they can meet some essential obligations like medications.

A government of India initiative – The individuals can have peace of mind as there is no risk of loss under this scheme.

It is mainly because it is a government of India initiative and the Pension Funds Regulatory Authority of India regulates it.

Nominee facility – If both the beneficiary and the spouse pass away, the nominees are eligible to avail of the benefits of the scheme.

Conclusion – Atal Pension Yojana

The scheme mainly helps to uplift the people from the unorganized sector. It is mostly because the government aims to see them financially independent in their post-retirement years.

The scheme doesn’t entertain early withdrawals as such, but it is exceptional only in some cases.

A beneficiary cannot avail of the government’s contribution if they wish to exit early from the scheme. Hence, the scheme is ideal for people who want to build a retirement corpus.

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