Atal Pension Yojana : In a nation where only 12% of the working population is estimated to have access to a formal pension, the Atal Pension Yojana (APY) emerges as a significant social security scheme in order to achieve pensioned society.
The scheme, initiated by Prime Minister Narendra Modi in 2015, is a government program that gives Indians the means to obtain Rs. 5,000 per month when they retire, ensuring financial dignity and independence in old age.
Moments after the launch, the scheme has already taken off with over 5 crore subscribers and is expected to grow manifold, especially among the workers in the unorganised sector as theocratically the only form of old age income security available at present were the assurances of sons in? nocturns.
For most Indians, the security of a guaranteed Rs. 5000 per month during retirement will be life-altering — however potential subscribers need to know how the scheme is structured, what payments are required, and who can join.
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Working of Atal Pension Yojana in Reality
Unlike the direct benefit transfer schemes, the APY is a contributory pensions scheme, where, as opposed to paying out dividends, subscribers instead make regular contributions while they work, getting pension payouts every month after they retire.
Under the scheme, an individual can choose the monthly pension amount they will receive after retirement — Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000, or Rs.5,000 — with contributions varying according to the entry age and pension level.
According to Rajesh Sharma, Branch Manager in Punjab National Bank’s Karol Bagh branch in Delhi: “People have this notion that APY is one scheme under which government will handover Rs. 5,000 to them every month.
In fact, it’s a defined-benefit pension plan that demands the you make regimented contributions throughout your working years.
What the government is providing is the guarantee and co-contribution support to eligible members.
If you are aiming to receive the maximum pension of Rs. 5,000 per month you need different contribution amounts based on when you join us:
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At 18:Rs 210 p.m (Rs 2,520 p.a.) for 42 years parties option 3.
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At 25 years: Around Rs 376 per month (Rs 4,512 yearly) for 35 years
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At 30 Pay till age 60Rs. 577 per monthly (Approx Rs. 6,924 per annum) for 30 years.
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At 35: Around Rs. 902 per month (Rs. 10,824 annually) for 25 years
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40: Around Rs 1,454 per month (Rs 17,448 a year) for 20 years
These contributions go on till you become 60, when you start receiving Rs. 5000 per month.
Furthermore, if the subscriber dies, the spouse shall be entitled to receive the same pension amount from the purchase of which he is receiving regular pension, thereby providing for the family specially the old aged parents.
Atal Pension Yojana The Government’s Contribution: How the Help Actually Arrives
Though members have to contributer to build a corpus for providing a pension, the government’s support is crucial through various facilities:
Co-contribution of benefit: the government co-contributes 50% of the subscriber’s contribution or Rs. 1,000 for eligible subscribers who joined the scheme up to March 31, 2016, whichever is lower.
This was a benefit for five years for accounts opened pre-deadline.
Assured returns: Then, the government provides the guaranteed returns — and given that the pension is paid over the next 15-20 years, this is a big one.
Tax benefits: APY contributions are eligible for tax deductibility under Section 80CCD(1) of the Income Tax Act, along with a further deduction of up to Rs. 50,000 under Section 80CCD(1B).
Meena Kumari, a 34-year-old vegetable vendor from Patna who joined APY three years ago, says: “I contribute rs550 per month now and get rs3,000 pension later.
I was dubious at first, but my bank manager told me that the government’s promise means my pension is safe, no matter how the economy is doing. I needed that reassurance to be willing to join.
Atal Pension Yojana Eligibility and Recent Changes
The APY was essentially launched for workers from the unorganized sector who were not a part of any organized pension system. EligibilityTo be eligible to participate, individuals must:
Indian citizenship
Between 18-40 years of age at entry (to be eligible for contributions for a minimum of 20 years).
Savings bank account/post office savings account being maintained by the claiment(s) and the amount withdrawn from the account.
Active mobile number and KYC documents
One major policy change affects income tax payers, which was announced in October 2022.
No enrolment application will be accepted under APY from 01st October, 2022 from persons who have been income tax payer in the above financial year.
This amendment is consistent with the main objective of the scheme which is to provide social protection to the economically disadvantaged.
“This adjustment will help APY benefits to be available to needy people, who actually require financial assistance from the government, for life after retirement,” says certified financial planner Vikram Mehta, who advises individuals on their pension portfolios.
“Usually, you can have access to additional retirement product such as NPS, EPF and private pension plans if you are a tax-paying citizen.
Register for Rs. 5,000 Monthly Pension in 7 Easy Steps
The registration process is simple enough for eligible citizens interested in pursuing a monthly pension of upto Rs. 5,000:
How you enroll depends on how and when you get your Medicare coverage:
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Go to your bank branch that hold a savings account of yours
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Do netbanking if online APY enrollment is offered by your bank
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Bank via mobile, using apps that support APY enabling
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If you have a post office savings account, then do visit your nearest post office
Fill out the APY registration form:
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Choose Rs. 5,000 as your monthly pension requirement
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Aadhaar information Your Aadhaar details will be used for identification.
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Choose how often you want to contribute (monthly, quarterly or half-yearly)
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Opt for an auto-debit facility for a systematic contribution followed by that.
Authorize automatic debits:
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Submit auto debit instruction form for timely donations
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Ensure you have enough funds in your nominated account to cover your contributions
Receive confirmation:
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And retrieve your Permanent Retirement Account Number (PRAN)
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Retain the APY Account Statement for your records
Sunita Devi, a 28-year-old domestic help from Lucknow who joined the new Rs. 5,000 pension category recently, recounts: “The bank man told me I should deposit Rs. 500 every month until I become 60 years old.
It’s something I can handle with the current salary I’m getting and the fact that I will get an amount of Rs. 5,000 per month after my retirement makes me feel a little secure about my future”
Atal Pension Yojana Key Considerations Before Applying
The appeal of monthly pension Income of Rs. 5000/- is certainly attractive, but the following factors need to be borne in mind by subscribers.
Long-term commitment: If you exit the APY prematurely, you will get only your contribution plus interest minus service charges. The game is designed for disciplined, long-term players.
Impact of inflation: The fixed pension is not inflation-adjusted. Rs. 5,000 per month can buy a lot more now than it will 25-30 years from now because of inflation.
Discipline of contribution: A missed payment may cause an account to be frozen or incur penalties. Subscribers, however, have to keep discipline on contribution throughout their working years.
Death benefit certainty: On death of the subscriber, the spouse continues to receive the pension; but on the death of both the subscriber and his/her spouse, the nominee receives only the corpus and no further pension.
Ravi Shankar, a certified financial planner with 15 years experience, says: “APY is best used in conjunction with other retirement planning, especially for those who have few other pension options available to them.
To get the most out of this tool, pair it with other savings vehicles that provide a hedge against inflation and more flexibility.”
Atal Pension Yojana After the contract: The complete story explained
Pension payment is guaranteed by the government, which is not applicable for other alternative products in the unorganised sector players But we’d better get perspective from these guarantees:
“It’s not that the government is handing out a Rs. 5,000 check once a month as a benefit,” says Deepak Sinha, an economist who specializes in social security systems.
“Instead, it is promising you that your contributions, along with the investment gain on those contributions, will ensure a promised pension, no matter what it costs when you are in retirement.
This government guarantee is the difference between what APY offers and private pension products.”
To millions of Indians with no employer-supplied retirement benefits, this government guarantee is priceless security.
“I don’t understand complex investment products but I trust the government’s promise that if I contribute regularly, I’ll get my pension,” says 39-year-old Ahmedabad auto-rickshaw driver, Ramesh Kumar, who recently signed up. This sense of clarity and security is what made me want to join.”
With India’s demographic landscape shifting due to increasing life expectancy and an aging population, schemes such as APY are vital to ensure retirement security.
This government-back initiative still keeps the route open for eligible citizens to receive Rs. 5,000 every month of their retirement just as long as you are willing to make disciplined contributions (if they know the contribution requirements and long-term commitment).
