Atal Pension Yojana (APY) is a guaranteed pension scheme, launched in the year 2015 which primarily targeted especially the poor, the underprivileged, and the workers in the unorganized sector. This scheme is government-backed and is administered by the Pension Fund Regulatory and Development Authority (PFRDA). Through this scheme, people from the unorganized sector can save for their retirement voluntarily as it is open to all bank account holders in the age group of 18 to 40 years.
The contribution amount for this scheme is derived from the individual’s age and the pension amount is chosen. Experts suggest, opting for this scheme at an early age reaps the maximum benefit and minimizes the investment required to reach the desired goal. The subscribers would receive the guaranteed minimum monthly pension of Rs 1000 or Rs 2000 or Rs 3000 or Rs 4000 or Rs 5,000 at the age of 60 years. The monthly pension would be available to the subscriber, or to the spouse. After their death, the pension corpus, as accumulated at age 60 of the subscriber, would be given to the nominee of the subscriber. If the investor after reaching 60 years of age dies, the spouse can choose to either exit the scheme and claim the corpus or continue the scheme for the balance period.
To apply to the scheme, investors can fill the form for Atal Pension Yojana available both at the bank and online. They can either visit any nationalized bank to start their APY account or can download the form from the official website and submit it manually to the respective bank. The forms are available in multiple languages.
In this scheme, the investor needs to keep contributing regularly till the age of 60, and then the fixed amount of monthly pension starts. Under certain circumstances, before the age of 60 years, investors can also make a premature exit from their Atal Pension Yojana account. According to PFRDA, in the event of a terminal disease or death, one can make a premature exit.
This account does not deactivate if the investor stops making the contribution, it will only get deactivated if the account balance becomes zero without any self-contributions and/or due to deduction of account maintenance charges and fees.
Under this scheme, investors qualify for tax deduction under section 80CCD (1) of the Income-tax Act. The pension received by an individual is treated as their total income and is taxed as per their tax rate.