The central government of India launched its Atal Pension Yojana (APY) in FY2015-16 to consolidate the social security of the working poor. This scheme replaced the previously announced Swavalamban Scheme, as earlier, the beneficiaries used to face complexities while redeeming their benefits
Financial critics recognise the APY scheme as an ideal extension of the widely acclaimed National Pension Scheme (NPS). Besides the apparent pension benefits, this scheme has other advantages, so read on to unearth all the details of this Yojana
Why does it seem sensible to contribute to APY?
The APY is brought into the picture to financially support the unorganised sector workers during their post-retirement period. This plan will offer guaranteed returns as monthly payments to all those who will dedicatedly invest in their accounts until they turn 60.
As the scheme is governed and run by the Pension Funds Regulatory and Development Authority (PFRDA), there’s no need to worry about the genuineness of this scheme. The Indian Government strategically formed the PFRDA based on the provisions of 1999’s OASIS report. Subsequently, this authority has developed the NPS to promote India’s overall pension sector. Such contributions speak about its credibility as a voluntary organisation striving to secure the lifestyle of the unorganised sector of the country.
What are the key details of the APY?
If you were totally unaware of the APY scheme, then let us clarify that it is a regular contribution-aided pension program. Here are some important facts related to the plan which you must understand vividly before starting to put money.
● Beneficiaries who voluntarily wish to become a part of this program are guaranteed a fixed monthly income after they retire. Depending on their chosen plans, this amount can be Rs 1,000/ Rs 2,000/ Rs 3,000/ Rs 5,000.
● Before applying for this APY program, the prospective applicants must have their own savings bank account.
● To get guaranteed returns, one must contribute regularly every month for at least 20 years.
● If you intend to enter the scheme right now, you must be at least 18 years old. The upper age limit has been extended up to 40 years.
● To enrol for this plan, you can get in touch with a bank authorised to dispense the scheme benefits. Otherwise, you can contact an aggregator of the previously run Swavalamban Yojana.
● Any person who has started contributing to the APY is subject to late fines if they delay monthly payments. These late fees range from Rs 1 (when the monthly payable is up to Rs 100) to Rs 10 (when the concerned individual must pay over Rs 1,001) each month.
● In case you were previously enrolled in the Swavalamban program, then there’s no requirement to face further hassles. Your account gets automatically switched to the APY scheme. Although the government co-contribution, if received for one or more years previously, gets adjusted with the new scheme’s 5-year co-contribution offering.
● Earlier subscribers of the Swavalamban Scheme, who are above 40, can either continue to be a part of the APY program or withdraw their corpus as a lump sum.
APY – 3 additional features & benefits
Here are some highlights of the APY that make this program more attractive:
● Auto contribution
You can set the automatic debit process to ensure the monthly due contributions are never skipped. To enable this system, you can seek help from the bank officials or use the respective mobile banking app and authorise the necessary actions.
However, before doing this, make sure the concerned savings account always has the required balance. Failing to maintain the bare minimum amount will attract penalties.
● Option to increase/ decrease contributions
The Government allows you to increase or cut down your monthly contributions once every year. This keeps the scheme flexible, allowing the participants to easily manage other aspects of their budget. Although you must note that as you keep changing the contributions throughout the tenure, the guaranteed pension money also modifies.
● Room for tax exemptions
Individuals paying a part of their income to the APY scheme are eligible for tax exemptions on that same amount by virtue of Section 80CCD of the Income Tax Act. Further, two separate divisions come into play in this segment.
If you contribute to the Atal Pension Yojana scheme, as per Section 80CCD (1), you will be eligible for a 10% rebate on gross annual income for up to Rs 1.5 lakh. Also, you may claim an additional exemption of Rs 50,000 leveraging the benefits of Section 80CCD (1B).
How should you register for the APY?
The enrolment process is simple, and you may execute it following a few basic steps. First, head to the official website of the National Securities Depository Limited (NSDL) and download the suitable application form. Then, you must carefully fill out the form and attach a self-attested Aadhaar photocopy.
Finally, submit the deliverables and the initial deposit to an APY-registered bank. Also, mention whether you are willing to post your contributions half-yearly, quarterly or monthly.
Please note that you should already have a savings account with the bank you chose for this scheme. In this regard, if you are comfortable handling the whole process online and already have a savings account with certain banks like ICICI, SBI, Axis etc., then you may complete each step from the comfort of your home.
The APY is among the many central government’s novel initiatives launched in 2015, and that year also witnessed other revolutionary proposals like the Sukanya Samriddhi Yojana, PM Kaushal Vikas Yojana, PM Life Light Insurance Scheme, etc.
Each of these programs has its different eligibility criteria. But the most common aspect is that the application process is plain and simple. Also, the Government runs campaigns from time to time to make the citizens aware of their rights. This helps secure the financial future of families well-versed in other investment avenues.