Atal Pension Yojna (APY) scheme – details, features and benefits

Read about the features, details, eligibility and pension amount under the newly launched Government scheme - the Atal Pension Yojna or APY, which was launched on 9th May 2015 in Kolkata along with other two schemes - PMJJBY & PMSBY.

The Atal Pension Yojna (APY) is one of the three social security schemes launched by PM Modi on 9th May 2015. The other two schemes that were launched are the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY), which have been discussed in detail in separate articles.

Here we look at the features and details of the Atal Pension Yojna (APY) scheme or APY.

What is Atal Pension Yojna and how it works

Unlike PMJJBY and PMSBY, which are insurance related schemes, Atal Pension Yojna is a pension related scheme mainly targeted at workers in the unorganized sector. Planning for retirement is very important for financial stability during old age and there haven't been many prominent Government pension schemes until the New Pension Scheme (NPS) which came into existence few years back.

See: LIC Jeevan Nidhi policy - Review, pension plan, benefits, returns, premium and other features

But NPS failed to gain considerable popularity in these years. Now another pension scheme has been launched by the Government and it would possibly bring some reforms in the pension sector of the country.

Atal Pension Yojana - 1

The selling point of the APY scheme is that it provides guaranteed minimum pension to the subscribers. This guaranteed minimum pension per month under APY will be Rs.1000/-, Rs.2000/-, Rs.3000/-, Rs.4000/-, and Rs.5000/- depending upon the subscriber's contributions and will start upon attaining 60 years of age. Subscribers must open an APY account and having a savings bank account is mandatory for this purpose. On death of the subscriber, the spouse will get the pension and in case of death of both subscriber and spouse, the subscriber's nominee will be given the accumulated pension corpus.

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Who can join the Atal Pension Yojna scheme?

The following are the eligibility criteria to join Atal Pension Yojna (APY) scheme:
  • The subscriber must be a citizen of India.

  • He/she must be in the age group of 18-40 years.

  • He/she must have a savings bank account or must open a savings bank account.

  • He/she must have a mobile phone with a valid number.

  • Beneficiaries of other social security schemes like EPF, NPS, PPF, etc. are also eligible to enroll for the APY scheme.

Government's contribution under Atal Pension Yojna

Government contribution under APY scheme is available to only those subscribers who are not contributing to any other schemes like the EPF or similar schemes and who are not income tax payers. Tax payers and those covered by other schemes are not eligible to receive Government's contribution. The Government contribution will be 50% of the total contribution or Rs.1000/per year, whichever is lower. This will be available to subscribers who join the scheme in the period – 1st June 2015 to 31st December 2015 and will be for a period of 5 years from 2015-16 to 2019-20.

How to open Atal Pension Yojana Account

  • Visit the bank where you have your savings account.

  • Obtain and duly fill the APY Registration Form .

  • Give a copy of Aadhar and also give your registered mobile number.

  • Your monthly contribution to your APY account will be auto-debited from your savings account and hence it is important to maintain sufficient balance for the monthly transfer.

Non-maintenance of balance or default in monthly contribution to APY account

If your savings account does not have sufficient balance towards monthly contribution to your APY account before the due date, it will be treated as default and is liable to attract penalty from banks. The amount of this penalty is between Rs.1 per month (minimum) to Rs.10 per month (maximum). The penalty breakup is as follows:
  • for monthly contribution up to Rs.100 - Rs.1 per month penalty
  • for monthly contribution up to Rs.101 to Rs.500 - Rs.2 per month penalty
  • for monthly contribution up to Rs.501 to Rs.1, 000 - Rs.5 per month penalty
  • for monthly contribution over Rs.1, 001 - Rs.10 per month penalty

Penalty for discontinuation of APY account contribution

If you discontinue the payments of your APY account contribution, the penalty breakup is as follows -
  • After 6 months, the account will be frozen.
  • After 12 months, the account will be deactivated.
  • After 24 months, the account will be closed.

Monthly contribute required in APY scheme to get guaranteed pension of Rs.1000/Rs.2000/Rs.3000/Rs.4000/Rs.5000

The amount one needs to contribute to the Atal Pension Yojna scheme per month to get a pension from Rs.1000 to Rs.5000 depends on the age of entry into the scheme. A person who entered at an early age has to contribute less compared to a person who joined at a later age.

The table below gives an approximate contribution value against different ages of entry.

Atal Pension Yojana - 2

What is the corpus amount given to the nominee under Atal Pension Yojna?

As mentioned earlier, upon death of both the subscriber and the spouse, the nominee assigned by the subscriber will receive the corpus pension amount. This corpus amount is different for each range of the pension amount i.e., the corpus amount for Rs.1000 monthly pension will be different from that for Rs.2000 monthly pension and so on.

The corpus amount returned to the nominee for different ranges of pension is as follows:
  • Corpus amount for monthly pension of Rs.1000 = Rs.1,70,000
  • Corpus amount for monthly pension of Rs.2000 = Rs.3,40,000
  • Corpus amount for monthly pension of Rs.3000 = Rs.5,10,000
  • Corpus amount for monthly pension of Rs.4000 = Rs.6,80,000
  • Corpus amount for monthly pension of Rs.5000 = Rs.8,50,000

Other important features of the Atal Pension Yojna (APY)

  • The APY scheme will be implemented by the Pension Fund Regulatory and Development Authority (PFRDA) or the Government.

  • Your monthly auto-debit date for APY account contribution will fixed on your initial investment date.

  • It is mandatory to assign a nominee for your APY account.

  • Aadhar card is considered as the primary KYC document but it is not mandatory. You can join the APY scheme even if you do not have Aadhar card. However, having an Aadhar number is good for the long-term.

  • To know your APY balance amount , you will get regular SMS alerts on your registered mobile number which you gave during opening the APY account. Apart from SMS alerts, you will also get physical statements from time to time.

  • You cannot open more than one APY account. Only one APY account per person is allowed.

  • There are no income tax benefits on amounts for APY contribution.

  • You can change your monthly contribution amount to either a higher or lower value. This can be done once a year.

  • Exit from APY scheme before attaining 60 years is permitted only upon death of the subscriber (or beneficiary) or terminal disease.

How effective is the Atal Pension Yojna (APY) – merits and demerits

  • The most positive feature of the APY scheme is that it provides guaranteed pension. Also due to the lack of strong pension schemes, the Atal Pension Yojna can be worth investing in. But, the scheme offers a maximum pension of Rs. 5000 per month and if we take into account the inflation rate of India, this is just a meager amount in the future during retirement.

  • The scheme is mainly targeted at the low-income groups and unorganized sector and will be quite helpful for them, though it may not be attractive to the middle-class working groups.

  • The percentage of return (maximum Rs. 8, 50,000 corpus for Rs. 5000 pension) is much lower for such a long-term compared to your PPF contribution or other schemes.

  • Also the lack of liquidity in the scheme (you cannot withdraw your deposited amount when you like) given its long lock-in period, makes the APY less appealing.

  • A major drawback of the APY scheme is also that the pension amount is not tax-free . This gives an even lesser return to the subscriber.

  • The Government contributes for only five years and only to the account of those subscribers who are not tax payers and not contributing to other schemes. This naturally eliminates a huge chunk of the population from being eligible for this contribution.

To summarize briefly, the Atal Pension Yojna has its own merits and demerits on different sections of the society. One who is not enrolled under any pension or other related schemes can join the APY scheme as the monthly contribution is not very high.

For further details:

Official Website:
National toll-free NO: 1800-180-1111,1800-110-001

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Pradhan Mantri Jeevanjyoti Bima Yojna - bringing insurance to common man's doorstep

The central government has come up with a couple of social security schemes for the betterment of the quality of life of common man. One of such schemes is the Pradhan Mantri Jeevanjyoti Bima Yojna - also known as PMJBY. Aimed at reaching out to the sector hitherto untouched by the insurance sector, what does this has on offer? Let us try to analyse and understand the scheme.

More articles: Atal Pension Yojna Pension Schemes


Author: Timmappa Kamat07 Jul 2015 Member Level: Gold   Points : 5

The scheme seems to have a lack of proper procedure. It is more true in case of existing NPS-S members. There is a penalty for not maintaining the minimum balance required in the bank account. Given the fact that the scheme has been devised for the unorganised sector who are not regular bank customers, this could drive them away from the scheme. The pension fund regulator, PFRDA recently came on record stating that the tax treatment of the scheme is not clearly mentioned. It seems to be a EET( Exempt Exempt Taxed) product which means there will be taxation at the time of withdrawal. Other similar products like EPF and PPF are EEE(Exempt Exempt Exempt).

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