Atal Pension Yojana (APY) is a guaranteed pension scheme offered by the Government of India, especially for people looking for a fixed pension in their retirement years. The Pension Fund Regulatory and Development Authority (PFRDA) looks after the APY pension scheme. This scheme was brought in to encourage people from the unorganized sector to save for their retirement, voluntarily. Opting for this scheme at an early age can maximize the benefit of the scheme. Entering early also minimizes the investment required to reach the desired goal for an investor.
To apply for the Atal Pension scheme, investors can head to any bank as almost all nationalized banks provide the option to opt for this scheme. Investors can also do it on the official website of NDLS wherein the registration forms for APY are available online, from where they can be downloaded. Investors can just fill up the application form and submit it to their respective bank, along with their mobile number, and Aadhaar card details. On approval, the investor will be informed by a confirmation message.
Here are a few details you should know before investing in the Atal Pension Yojana scheme:
- Even though almost all nationalized banks provide the option to opt for this scheme, there are, however, certain criteria to invest in the Atal Pension scheme. For instance, APY is only available for people aged 18 to 40 years of age. Additionally, to invest in the Atal Pension Yojana, investors have to have a savings account in either a bank or a post office.
- The pension amount from the APY scheme is determined based on one’s age and the contribution one makes. After reaching 60 years of age, one can also choose how one wants to get the fixed pension amount, which ranges from Rs 1,000 to Rs 5,000.
- Under the APY scheme, investors need to keep contributing regularly till age 60 and, hence, it is known as the deferred pension scheme. After regular contributions till age 60, the fixed amount of monthly pension starts.
- Before the age of 60 years, investors can also make a premature exit from their Atal Pension Yojana account, however, only under certain circumstances. Such as, in the event of a terminal disease or death, one is eligible to make a premature exit, according to PFRDA.
- In the case where the investor dies, the investor’s spouse can claim the pension. However, in the case of the death of both the investor and his/her spouse, the nominee will receive the accumulated corpus. Additionally, if the investor after reaching 60 years of age dies, the spouse gets the option to either exit the scheme and claim the corpus or continue the scheme for the balance period.
- The APY account does not get deactivated if the investor stops making the contribution towards their APY scheme. The discontinuation of payment will not deactivate the account immediately. As per the rules, the account will only get deactivated when the account balance becomes zero without any self-contributions or the Government co-contributions if any, and due to deduction of account maintenance charges and fees.
- As the Atal Pension scheme has been notified as a pension scheme by the government, investors also qualify for tax deduction under section 80CCD (1) of the Income-tax Act, 1961. However, the pension that an individual receives is treated as one’s total income and is taxed as per his/her tax rate.