The Atal Pension Yojana (APY) is a fixed pension scheme set up by the Government of India under the National Pension System (NPS). It is separate from the regular NPS schemes under which you allocate your money between equity, government bonds and corporate bonds.
You pay a specified amount (refer to the table below) and receive a pension ranging from Rs 1,000-5,000 depending on your contributions. You can join between the ages of 18 and 40. Joining at the age of 18 implies a contribution period of 42 years whereas joining at the age of 40 implies a contribution period of 20 years. However, the amounts are correspondingly adjusted for these ages of joining. You will start receiving your pension at the age of 60. It will be paid to your spouse (if any) on your death. Upon the death of your spouse, the corpus is returned to your nominee.
- The APY pension is guaranteed. It is not linked to the market unlike mutual funds, stocks or even some of the allocations permitted by the regular NPS.
- The APY allows you to save small amounts as mentioned in the table below.
- The government will co-contribute 50% of the subscriber’s contribution or Rs 1,000, whichever is lower for a period of five years from the subscriber’s year of joining. However, this only applies if the subscriber is not an income taxpayer or a beneficiary of any other social security scheme.
- You can make monthly contributions to your APY account which are directly debited from the account.
- The maximum pension is fixed at Rs 5000.
- There is no tax benefit on the contribution or on the pension payment.
- There is no equity allocation and hence no scope for long-term capital growth.
- You have to maintain the periodic contributions that you have signed up for. Delay in making them will attract penalties from the banks collecting the contributions. After 6 months, the account is frozen and after 12 months, it is closed.
How to open an account
You can complete the entire account opening process online here if you have an account with HDFC Bank, Bank of India, Indian Bank, Bank of Maharashtra, Corporation Bank, Andhra Bank, Punjab National Bank, Sarva Haryana Gramin Bank, Allahabad Bank, Saurashtra Grameen Bank or Andhra Pradesh Grameen Vikas Bank.
You must also have an Aadhar Number and mandatorily provide a nominee. In case of death of the subscriber before the age of 60 years, the accumulated corpus is paid out to the nominee.
Alternatively, you can complete this process offline with your nearest Point-of-Presence (PoP). You can locate it here. You must have an Aadhar number and a savings bank account.
Monthly contributions and pension payable:
|Age of Entry||Years of Contribution||Monthly payment for pension of Rs. 1000 and Indicative return of corpus to the nominee of Rs1.7 Lakh.
|Monthly payment for pension of Rs. 2000 and indicative return of corpus to the nominee of Rs.3.4 Lakh.
|Monthly payment for pension of Rs. 3000 and indicative return of corpus to the nominee of Rs.5.1 Lakh.
|Monthly payment for pension of Rs. 4000 and indicative return of corpus to the nominee of Rs.6.8 Lakh
|Monthly payment for pension of Rs. 5000 and indicative return of corpus to the nominee of Rs.8.5 Lakh.