APY or, Atal Pension Yojana

APY or, Atal Pension Yojana

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The unorganized sector workers are the primary beneficiaries of the Indian citizens' pension plan known as Atal Pension Yojana (APY).The guaranteed minimum pension under the APY is Rs.1,000, 2,000, 3,000, 4,000, or Rs.5,000 per month, depending on their contributions. The APY program is open to any Indian citizen.

The scheme's eligibility requirements are as follows:

1. The subscriber should be between the ages of 18 and 40.

2. He or she ought to have a savings or post office savings account.

3. During registration, the prospective applicant may provide the bank with their Aadhaar and mobile phone number to facilitate receiving APY account updates on a regular basis. However, enrollment does not necessitate Aadhaar.

Need for a Pension

A pension provides a monthly income to people who no longer earn money for the following reasons:

1. Age-related decline in earning potential

2. The migration of earners from nuclear families is on the rise.

3. Cost of living increases.

4. Prolonged lifespan.

5. A steady monthly income ensures a dignified retirement.

Contribution from the Government of India

The co-contribution from the Government of India is available for five years, from the Financial Year 2015-16 to the Financial Year 2019-20, for subscribers who join the plan between June 1, 2015 and March 31, 2016, but are not covered by any Statutory Social Security Scheme and do not pay income tax. After receiving confirmation from the Central Record Keeping Agency that the subscriber has paid all of the installments for the year, the Pension Fund regulatory and Development Authority (PFRDA) will pay the government co-contribution to eligible Permanent Retirement Account Numbers (PRANs). The government co-contribution will be credited to the subscriber's savings bank account or post office savings bank account, up to a maximum of Rs 1000, at the end of the financial year. Beneficiaries who are covered by statutory social security schemes who are covered by the following enactments would not be eligible to receive APY's government co-contribution:

1. Act of 1952 Concerning the Employees' Provident Fund and Other Provisions

2. The 1948 Coal Mines Provident Fund and Other Provision Act

3.1955, Assam Tea Plantation Provident Fund and Other Provisions

4.1966 Seamen's Provident Fund Act

5. Employees’ Provident Fund and Other Provision Act of 1961 in Jammu and Kashmir.

6. Any other social security program mandated by law.

Benefits of the APY

The government would cover the shortfall in the minimum guaranteed pension if the realized returns on pension contributions are less than the assumed returns for the minimum guaranteed pension over the contribution period. This would ensure that the minimum guaranteed pension would be paid for. On the other hand, if the assumed returns for the minimum guaranteed pension are lower than the actual returns on pension contributions, the difference will be credited to the subscriber's account during the contribution period, enhancing the subscribers' scheme benefits. In addition, the government would contribute half of the total amount. Each eligible subscriber who joins the plan between June 1, 2015 and March 31, 2016, and who is neither a beneficiary of any social security scheme nor a tax payer will receive either 1000 or the lesser amount. The co-contribution from the government will be made for five years, from 2015-16 to 2019-20.A subscriber to the National Pension System (NPS) is currently eligible to receive a tax deduction for both their contribution (up to a certain limit) and the investment returns on those contributions. In addition, when a subscriber leaves NPS, the annuity's purchase price is not subject to taxation. Instead, the subscriber's pension income is treated as normal income and is taxed at the subscriber's marginal tax rate. The APY subscribers are subject to the same tax treatment.

How to Open an APY Account

1. If the subscriber does not already have a savings account, contact the bank or post office where the account is held or open one.

2. Fill out the APY registration form with the assistance of the staff at the bank and provide the bank account number or Post Office savings bank account number.

3. Give your Aadhaar or mobile number. Although it is not required, it may be provided to facilitate contribution-related communication.

4. Make certain that the savings bank account or post office savings bank account maintains the necessary balance for the transfer of monthly, quarterly, or semiannual contributions.

The subscriber's savings bank account or post office savings bank account can be used to auto-debit contributions that are due on a monthly, quarterly, or half-yearly basis. The intended or desired monthly pension as well as the subscriber’s age at entry determines the contribution amount each month, quarterly, or half-yearly. On any day of the month, in the case of monthly contributions, or on any day of the first quarter, in the case of quarterly contributions, or on any day of the first half year, in the case of half-yearly contributions, the contribution can be made to APY through a savings bank account or post office savings bank account.

In Case of Continuous Default

To avoid paying interest on contributions that have been delayed, subscribers should keep the required balance in their savings bank accounts or post office savings bank accounts on the specified due dates. The contribution can be made on the first of each month, quarter, or half-year in a savings bank account or post office savings bank account. However, if the subscriber's saving bank account or post office savings bank account does not have enough money in it by the end of the month, the end of a quarter, or the end of a half year, the account will be considered in default, and the subscriber will be required to make a contribution the following month in addition to paying overdue interest for contributions that are late. It is required of banks to collect Rs.1 per month for each Rs. 100 of contribution, or a portion thereof, for each missed monthly payment. In the event of a delayed quarterly or semiannual contribution, interest will be recouped accordingly. The subscriber's pension fund will continue to contain the collected amount of overdue interest. Subject to the availability of the funds, more than one monthly, quarterly, or half-yearly contribution can be recovered. In all cases, the contribution and any late fees, if any, must be paid back. The bank's internal procedure will be this. When the account has sufficient funds, the outstanding balance will be recouped. On a regular basis, account maintenance costs and other related costs would be deducted from the subscriber's account. For those subscribers, who have availed Government co-contribution, the account would be treated as becoming zero when the subscriber corpus minus the Government co-contribution would be equal to the account maintenance charges, fees and overdue interest and hence the net corpus becomes zero. The government's co-contribution would be returned in this scenario.

Procedure for withdrawing from APY

1. When the subscriber reaches the age of 60: If the investment returns are greater than the guaranteed returns embedded in the APY, the subscribers will submit a request to the associated bank for drawing the guaranteed minimum monthly pension or a higher monthly pension upon reaching the age of 60.Upon the subscriber's death, the spouse (default nominee) receives the same monthly pension amount. In the event of a subscriber's or spouse's death, the nominee will be entitled to receive the subscriber's pension wealth up to the age of 60.

2. In the event of a subscriber's death after the age of 60 for any reason: The spouse would receive the same pension in the event of the subscriber's death, and the subscriber's pension wealth would be returned to the nominee upon both of their deaths (subscriber and spouse).

3. Prior to the age of 60: When a subscriber opts to voluntarily exit APY at a later date, he or she will only receive a refund of the contributions made to APY as well as the net actual accrued income earned on those contributions (after deducting account maintenance fees).These subscribers will not receive a refund for the Government co-contribution or any accrued income from the Government co-contribution.

4. Subscriber dies before the age of 60: If the subscriber dies before the age of 60, the subscriber's spouse will have the option to continue contributing to the subscriber's APY account, which can be held in the spouse's name, for the remainder of the vesting period until the original subscriber turns 60.Up until the subscriber's death, the subscriber's spouse is entitled to the same pension amount as the subscriber. Alternately, the spouse or nominee will receive the entire APY corpus.

Other significant information

1. It is required to give candidate subtleties in APY account. The spouse of the subscriber will be the default nominee if the subscriber is married. Subscribers who are not married can nominate anyone else, but they are required to provide information about their spouse once they have married. It is possible to provide the spouse's and nominees' Aadhaar information.

2. There is only one APY account per subscriber, and it is unique. It is not allowed to have multiple accounts.

3. Once a year, a subscriber has the option to reduce or increase their pension during the accumulation phase.

4. The subscriber receives periodic information about PRAN activation, account balance, contribution credits, and other pertinent information will be communicated to APY subscribers via SMS notifications. Additionally, the subscriber will receive an annual physical statement of account.

5. The subscriber will receive the actual APY statement annually.

6. Even if you move or change where you live, the payment can still be made through automatic debit.

7. The scheme is only available to Indian citizens.

8. The subscriber can change the mode (monthly/quarterly/half yearly) of auto debit facility once in a year during the month of April.