Atal Pension Yojana (APY): Retirement Scheme

Sunday, May 31st, 2015 Amritesh 3 responses 1315 Views

The Government of India has introduced various schemes in this Fiscal Year which would address the Financial Social Security concerns among Lower Income group in the country. The schemes are aimed at providing financial security and allow individuals to sustain themselves. The three schemes introduced by the Government provide Term Insurance, Accident Insurance and Pension Cover for the Individuals.
The schemes were announced by our Hon’able Finance Minister, Shri Arun Jaitley in his Budget Speech for the fiscal year 2015-16. The few schemes which will benefit individuals are the Pradhan Mantri Jeevan Jyoti Yojana (PMJJY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Atal Pension Yojana (APY).
The Pradhan Mantri Jeevan Jyoti Yojana (PMJJY) is a Term Insurance scheme which would provide monetary benefits to the nominee in case of demise of the individual/policyholder. Whereas, the Pradhan Mantri Jeevan Suraksha Yojana (PMSBY) is an Accident Insurance scheme which would compensate in case of death due to accident or any severe disability suffered due to accident.
In my previous post I have covered both the schemes in details and links for the same is available below. In this post I would discuss about the Atal Pension Scheme (APY).

EPS vs NPS vs APY: Comparison
Atal Pension Yojana (APY) in my opinion is a decent scheme for Individuals who are not covered under any other Pension Scheme and are yet to start with their Retirement Planning. Atal Pension Yojana has been launched with a target to bring more individuals from unorganized sector into the pension fold. A large population in India is still without any pension cover. Thus this Scheme is aimed at bringing more and more people under the pension coverage.
The Scheme will be administered by the Government and Pension Fund Regulatory and Development Authority (PFRDA), the same organization which administers the National Pension Scheme (NPS). The Benefit under the Scheme is guaranteed by the Government of India.

Click to Read About:Atal Pension Yojana Indepth Analysis
Let’s look the Scheme in details:-
All savings bank account holders between the age group of 18-40 years will be eligible to join the scheme. In case of individuals having multiple bank accounts in the same bank or different banks, can apply for the scheme only through one savings account.
In case of multiple applications, the additional applications will be rejected and the contribution paid for the same shall be liable to be forfeited.
Individuals can apply for the Scheme by filling up the form available at all the branches of participating bank where they have their Savings Account. One can also apply online through the window opened up by the banks for the same.
The process is simple and does not require any lengthy formalities.
The contribution period will be of starting from 1st June,2015. The minimum contribution period is 20 years. However, people joining at younger age will have to vest for a longer term but the contribution amount will be comparatively lesser.
  • The minimum contribution period is 20 years. The tenure and contribution will depend on the entry age of an Individual. If an Individual joins the scheme at the age of 18 years then the contribution period for him/her will be 42 years, however the contribution amount for the same will be very low.
  • The Fund will mature when the Individual attains the age of 60. The pension will begin from then onwards.
  • In case of non receipt of monthly contribution the terms have been revised and going forward the account will not be deactivated and closed till the account balance with self contribution minus the government contributions become zero due to deduction of account maintenance and charges.
  • Subscriber should ensure that the Bank account to be funded enough for auto debit of contribution amount.
  • Banks are instructed to collect additional amount for delayed payments (amended), such amount is now fixed as shown below: 
  • Re. 1 per month for contribution upto Rs. 100 per month. 
The fixed amount of interest/penalty will remain as part of the pension corpus of the subscriber.
  • Contribution to the Atal Pension Yojana (APY) will be based on the Pension Amount chosen and age of an Individual.
  • The contribution will be automatically debited from the Savings account registered under the scheme.
  • The Contribution can be made on Monthly, Quarterly or Semi Annual basis as per the revised norm.
  • The Central Government will also contribute additional 50% of the total contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, i.e., from Financial Year 2015-16 to 2019-20, for individuals who will join between the period 1st June, 2015 and 31st March, 2016 and who are not members of any statutory social security scheme and who are not income tax payers. However the scheme will continue after this date but Government Co-contribution will not be available.
  • The Statutory Security Schemes means Employees’ Provident Fund and other such welfare schemes.

On attainment of 60 years of Age:
APY contribution account is closed and entire pension wealth is annuitized. The pension is immediately payable to the subscriber.
In case of death of the Subscriber:
In case of death of subscriber pension would be available to the spouse and on the death of both of them (subscriber and spouse), the pension corpus would be returned to his/her nominee.
Exit from the Scheme is permitted before the age of 60 years and the Subscriber will be paid the contributions, along with net actual interest earned on the contributions.
Contribution/Pension/Return with respect to Age:
Age of Entry
Pension of Rs 1,000/-
Pension of Rs 2,000/-
Pension of Rs 3,000/-
Pension of Rs 4,000/-
Pension of Rs 5,000/-
Rs 42/-
Rs 84/-
Rs 126/-
Rs 168/-
Rs 210/-
Rs 50/-
Rs 100/-
Rs 150/-
Rs 198/-
Rs 248/-
Rs 76/-
Rs 151/-
Rs 226/-
Rs 301/-
Rs 376/-
Rs 116/-
Rs 231/-
Rs 347/-
Rs 462/-
Rs 577/-
Rs 181/-
Rs 362/-
Rs 543/-
Rs 722/-
Rs 902/-
Rs 291/-
Rs 582/-
Rs 873/-
Rs 1164/-
Rs 1454/-
Projected Corpus Payable to Nominee
Rs 1.70 lacs
Rs 3.40 lacs
Rs 5.10 lacs
Rs 6.80 lacs
Rs 8.50 lacs
Recently Income Tax Department has issued a notification stating that contribution to APY is eligible for Tax Deduction U/S 80 CCD (1). This makes it a lucrative scheme for Individuals looking for Tax Saving option beyond the deduction available U/S 80C (Rs1,50,000/-).  This will be inclusive of the additional deduction  Rs 50,000/- available U/S 80 CCD (1). 
Individuals registered under Swavalamban Yojana and aged between 18-40 yrs will be automatically migrated to APY with an option to opt out. However, the benefit of five years of Government Co-contribution under APY would be available only to the extent availed by the Swavalamban subscriber already.
Individuals who will opt to exit from the scheme will be allowed to withdraw the lumpsum.
Individuals above the age of 40 years can continue with APY and receive pension on attaining the age of 60 years.
Amritesh is an experienced professional in the field of HR, Finance and Compliance. He is currently working in the IT Industry with an US based firm. He took up Blogging as a hobby which eventually turned into passion. He primarily focuses on topics related to Personal Finance, HR, Compliance and Technology.

All the opinions/suggestions/views expressed on this blog are just for sharing information. Readers are requested to consult their respective financial advisers and experts before taking any decision. Views shared through post or comments are personal opinion meant for reference of the readers. These should not be considered as Investment Advice or Legal Opinion. The Blog or the Author does not take any responsibility regarding any such action taken by any Individual.
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ashutosh lal dutta
ashutosh lal dutta

hi i am ashutosh. my question is suppose a person lives for 10 years after the retirement age of 60. after his demise wife gets the pension and after 5 years she died. what amount their nominee will get if they have planned for 5000/- pension.


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