Atal Pension Yojana (APY) is a government backed pension scheme open to all citizens of India. APY primarily focuses on the unorganised sector. It is administered by the Pension Fund regulatory and Development Authority (PFRDA). This scheme guarantees a minimum monthly pension in lower annuities between 1000 to 5000. Beneficiaries can opt for a pension of 1000, 2000,3000, 4000, 5000 rupees which they will start to receive as they attain 60 years of age. The amount of pension one receives is directly linked to the age at which they joined the scheme and the monthly amount contributed towards APY.
Who can invest and when can they begin investment here?
All Indian citizens between the age of 18 to 40 years can enrol under APY to begin receiving a pension after the age of 60. Any person who wishes to enrol under APY, must contribute to the scheme for a period of 20 years. Any individual enrolled under Swavalamban Yojana will be migrated under Atal Pension Scheme automatically.
How much does one contribute?
The APY calculation is based on the amount of pension which the applicant wishes to receive and the age at which he is being enrolled into the scheme. The monthly contributions will be low, if an individual enrols early into the scheme and he will have to pay a higher amount if he enrols later. The minimum contribution to get Rs.1000 as pension amount, at the age of 18, is Rs.42. The maximum contribution of Rs.1454 will be paid at the age of 40 years for a pension amount of Rs.5000.
Can the Government also contribute here?
The government also co-contributes under the APY for the people working in the unorganised sector. The co-contribution by the government would be 50% of the amount contributed by the beneficiary per year or Rs. 1000 per year, whichever is lower will be added by the Government. Subscribers enjoying the co-contribution cannot be members of any statutory social security scheme and should not be paying income tax (meaning their income tax payable should be “nil”).
Does the APY offer any tax benefits?
APY is a very low risk retirement option plan as it is backed by the Government of India. As it is a government notified scheme, it offers tax benefits under section 80(C). The deduction limit for the same is Rs.1,50,000 annually. Additionally, APY also qualifies for an additional benefit u/s 80(CCD)(1) for a limit of Rs.50000.This additional benefit of up to Rs. 50,000 annually is the same that applies to National Pension System contributions which is over and above the Rs. 1.5 lakh annual tax exemption benefit offered u/s 80C.
How can I close this account?
An APY account can be closed or exited from only in case of terminal illness or death. Upon death, the APY corpus is paid entirely to the nominee as a subscriber mentions in the APY account opening.
How can PensionBox help you?
You can be invested in any number of retirement products, PensionBox will help you track your savings for your retirement. APY is an investment/pension product which can be easily tracked on our app to ensure you are saving enough for your retirement.