India, for example, has a large population in the unorganised sector. So, the issue of old-age financial security is still a hot topic.
Knowing this, the Government of India launched the Atal Pension Yojana in May 2015. It aims to provide social security to unregulated workers and those excluded from the laws.
This pension scheme aims to provide retirement pensions. It targets, especially, the less fortunate in society.
This article details the scheme’s outline, pros and cons, and qualifications to participate.
What is the Atal Pension Yojana?
This scheme is for the organized sector of the economy. It is a government effort, known as the Atal Pension Yojana. In the APY system, the subscriber pays a small pension amount every month during their working career. In return, they get a pension of Rs 1,000 to Rs 5,000 per month from age 60.
The Pension Fund Regulatory and Development Authority (PFRDA) manages the fund. It is part of the National Pension System (NPS).
Atal Pension Yojana:- Most Important Features
1. Guaranteed Pension Benefits
Subscribers receiving any contribution in turn will get a fixed pension amount of ₹. 1000/-, ₹. 2000/-, ₹. 3000/-, ₹. 4000/- or ₹. 5000/- per month at the age of sixty years.
2. Government Co-Contribution
Under the scheme, which ran from June 1, 2015, to March 31, 2016, the government paid up to ₹1,000 each year per subscriber. This was equal to 50% of their contribution, or a maximum of ₹500. This applied for the first five years of their membership.
3. Low Entry Age
The scheme would be for all Indian citizens under 40. It means even young workers can start thinking about retirement.
4. Flexibility in Contributions
The contribution amount can thus be chosen depending on the wished pension amount by the subscriber. It can either take the form of a regular monthly, quarterly or half yearly donation.
5. Tax Benefits
APY also fulfill the tax deducted requirements under Section 80CCD of the Income Tax Act, thus making it as a tax saving scheme.
Eligibility Criteria
To enroll in the Atal Pension Yojana, an individual must meet the following criteria:
Eligibility Criteria
| Eligibility Criteria | Details |
| Age | Between 18 and 40 years |
| Citizenship | Indian citizen |
| Bank Account | Must hold a savings account in a bank or post office |
| Aadhaar Linking | Aadhaar is required for verification |
| Mobile Number | Active mobile number for communication |
How to Join Atal Pension Yojana
The process to enroll in APY is straightforward:
- Visit Your Bank or Post Office: Walk to any branch of any bank or post office where you have a saving account.
- Fill the APY Registration Form: Some of the information one should include are name, date of birth and the required pension amount.
- Aadhaar Submission: However, those who want to directly enroll for a bank account must link Aadhaar card with their bank account.
- Choose Contribution Amount: For a certain type of pension, choose your contribution to be made monthly, quarterly or half yearly.
- Choose a family member as the nominee. This avoids issues in transferring the benefits due to an unexpected event.
Contribution Chart
Below is a detailed chart showing the monthly contribution required for different pension amounts based on the age of enrollment:
| Age at Enrollment | ₹1,000 Pension | ₹2,000 Pension | ₹3,000 Pension | ₹4,000 Pension | ₹5,000 Pension |
| 18 | ₹42 | ₹84 | ₹126 | ₹168 | ₹210 |
| 25 | ₹76 | ₹151 | ₹226 | ₹301 | ₹376 |
| 30 | ₹116 | ₹231 | ₹347 | ₹462 | ₹577 |
| 35 | ₹181 | ₹362 | ₹543 | ₹722 | ₹902 |
| 40 | ₹291 | ₹582 | ₹873 | ₹1,164 | ₹1,454 |
Big benefits of Atal Pension Yojana
- Affordable Contributions: It can incorporate the low income earners through its low monthly premium rates.
- Guaranteed Returns: This is very different from market-linked pension schemes. APY offers a safe, assured pension.
- Family Benefits: If the subscriber dies, it is up to the spouse to either make the continuing payments or take the corpus.
- Social Security Net: APY encourages saving for a better future. It promotes independence from relatives who may refuse to help financially.
Limitations of Atal Pension
- Age Restriction: People who are above 40 years of age are excluded from membership.
- Fixed Pension Ceiling: The pension capped at only ₹5,000 a month may not be enough for everyone, even for those who want to retire at 50.
- Penalties for Default: Delays at any time of the year are subjected to addition ranging from ₹1 to ₹10 depending with the contribution made.
Comparison with Other Pension Schemes
| Feature | Atal Pension Yojana | National Pension System (NPS) | Employee Provident Fund (EPF) |
| Target Audience | Unorganized Sector | Salaried and Self-Employed Individuals | Salaried Employees |
| Pension Amount | Fixed (₹1,000 – ₹5,000) | Market-Linked Returns | Based on Contributions |
| Government Backing | Yes | Partial | Yes |
| Tax Benefits | Section 80CCD | Section 80C and 80CCD | Section 80C |
Conclusion
The Atal Pension Yojana is for Indians wanting a secure pension after work. It mostly helps those in the unorganized sector. APY offers a sense of security to subscribers and their loved ones. It promises returns from a $5 weekly contribution.
In as much as one is within this age, he or she should join APY so as to create a set for his or her future. It can indeed pay to plan early to avoid having to compromise and struggle through retirement years.
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