NPS- Atal Pension Yojana- Major Features, Eligibility, Contribution, Return and Tax benefits
APY gives a guarantee to its subscribers a minimum pension amount that can range from Rupees1000 to 5000 per month, when they attain an age of retirement.
Post last updated: November 2, 2023
What is Atal Pension Yojana (APY)?
The Atal Pension Yojana (APY) was launched by the Government of India in 2015 to address the pension needs of the unorganised sector. This scheme aims to provide financial security post-retirement and replace the Swavalamban Scheme introduced in 2010-11, which fell short in guaranteeing pension benefits. The scheme is regulated by PFRDA (Pension Fund Regulatory and Development Authority).
Key Features of Atal Pension Yojana
- Guaranteed Pension: Subscribers receive a minimum guaranteed pension of ₹1,000 to ₹5,000 per month after the age of 60.
- Government Contribution: For eligible subscribers, the Government of India contributes:
- 50% of the subscriber's contribution, or
- ₹1,000 per year, whichever is lower.
- This contribution was available for five years (2015-16 to 2019-20) for subscribers who joined on or before December 31, 2015.
- Open to All: All bank account holders can join the APY.
- Migration from Swavalamban Scheme: Existing Swavalamban Scheme subscribers were automatically migrated to APY.
Eligibility Criteria
- Age Requirement: Any Indian citizen between 18 and 40 years can join.
- KYC Requirements: Only Aadhaar and a mobile number are mandatory for identity verification.
- PRAN Generation: Aadhaar and mobile numbers are required to generate the Permanent Retirement Account Number (PRAN).
How to Open an APY Account
- Submit Form: Fill and submit the APY form at your bank.
- Provide Information: Share your Aadhaar number and mobile number.
- Initial Contribution: Deposit the first contribution based on your chosen pension amount.
- Auto-Debit Mandate: Authorize your bank to auto-debit the contribution amount.
- Nomination Details: Provide spouse/nominee details.
- Receive PRAN: Your bank will provide a PRAN number, along with an SMS and email confirmation.
Monthly Contributions for APY
Your monthly contribution depends on your age and desired pension amount. Here’s a quick reference:
| Subscribing Age (Years) | Contribution Period (Years) | Monthly Pension ₹1,000 | Monthly Pension ₹2,000 | Monthly Pension ₹3,000 | Monthly Pension ₹4,000 | Monthly Pension ₹5,000 |
|---|---|---|---|---|---|---|
| 18 | 42 | ₹42 | ₹84 | ₹126 | ₹168 | ₹210 |
| 19 | 41 | ₹46 | ₹92 | ₹138 | ₹183 | ₹228 |
| 20 | 40 | ₹50 | ₹100 | ₹150 | ₹198 | ₹248 |
| 21 | 39 | ₹54 | ₹108 | ₹162 | ₹215 | ₹269 |
| 22 | 38 | ₹59 | ₹117 | ₹177 | ₹234 | ₹292 |
| 23 | 37 | ₹64 | ₹127 | ₹192 | ₹254 | ₹318 |
| 24 | 36 | ₹70 | ₹139 | ₹208 | ₹277 | ₹346 |
| 25 | 35 | ₹76 | ₹151 | ₹226 | ₹301 | ₹376 |
| 26 | 34 | ₹82 | ₹164 | ₹246 | ₹327 | ₹409 |
| 27 | 33 | ₹90 | ₹178 | ₹268 | ₹356 | ₹446 |
| 28 | 32 | ₹97 | ₹194 | ₹292 | ₹388 | ₹485 |
| 29 | 31 | ₹106 | ₹212 | ₹318 | ₹423 | ₹529 |
| 30 | 30 | ₹116 | ₹231 | ₹347 | ₹462 | ₹577 |
| 31 | 29 | ₹126 | ₹252 | ₹379 | ₹504 | ₹630 |
| 32 | 28 | ₹138 | ₹276 | ₹414 | ₹551 | ₹689 |
| 33 | 27 | ₹151 | ₹302 | ₹453 | ₹602 | ₹752 |
| 34 | 26 | ₹165 | ₹330 | ₹495 | ₹659 | ₹824 |
| 35 | 25 | ₹181 | ₹362 | ₹543 | ₹722 | ₹902 |
| 36 | 24 | ₹198 | ₹396 | ₹594 | ₹792 | ₹990 |
| 37 | 23 | ₹218 | ₹436 | ₹654 | ₹870 | ₹1,087 |
| 38 | 22 | ₹240 | ₹480 | ₹720 | ₹957 | ₹1,196 |
| 39 | 21 | ₹264 | ₹528 | ₹792 | ₹1,054 | ₹1,318 |
| 40 | 20 | ₹291 | ₹582 | ₹873 | ₹1,164 | ₹1,454 |
Benefits After the Subscriber’s Death
- Before Retirement: If the subscriber passes away before retirement, the entire pension corpus (including contributions, government co-contributions, and returns) is given to the nominee.
- After Retirement:
- The pension continues for the spouse.
- On the death of both the subscriber and spouse, the corpus is returned to the nominee.
Retirement Corpus for APY
| Pension Amount Opted (₹) | Corpus Accumulated on Retirement |
|---|---|
| 1,000 | 1.7 Lakhs |
| 2,000 | 3.4 Lakhs |
| 3,000 | 5.1 Lakhs |
| 4,000 | 6.8 Lakhs |
| 5,000 | 8.5 Lakhs |
Investment of Contributions
Contributions are invested by PFRDA in various assets to ensure good returns. Investment details:
- 45%-50% in government securities.
- 35%-45% in debt securities and bank deposits.
- 5%-15% in equity market instruments.
- Up to 5% in asset-backed securities and other instruments.
How to Exit APY
- After Age 60: Subscribers can exit with 100% annuitization, receiving a guaranteed pension.
- On Death:
- Pension continues to the spouse.
- If both pass away, the corpus is handed to the nominee.
- Early Exit: Early exit is not permitted for living subscribers.
Consequences of Stopping Contributions
- 6 Months: Account frozen.
- 12 Months: Account deactivated.
- 24 Months: Account closed.
Ensure sufficient balance in your bank account for auto-debit.
Tax Benefits
- Contributions are eligible for tax deductions under Section 80C (limit: ₹1.5 Lakhs).
- Additional benefit under Section 80CCD(1b) up to ₹50,000.
Example:
If Ramesh contributes ₹824 per month to APY:
- Annual APY Contribution = ₹824 × 12 = ₹9,888
- Remaining limit under Section 80CCD(1b) = ₹50,000 - ₹9,888 = ₹40,112 (can be invested in NPS).
FAQs
What is the maximum pension under APY?
₹5,000 per month.
Can I join APY after age 40?
No, the age limit is 18-40 years.
Is Aadhaar mandatory for APY?
Yes, Aadhaar is mandatory for enrollment.
Can I exit APY before 60?
Early exit is allowed only in the case of the subscriber’s death.
Can NRIs join APY?
Yes, NRIs with Indian bank accounts can join APY.
Atal Pension Yojana is a valuable scheme for financial independence and security post-retirement. Subscribe today to secure your future!
