Atal Pension Yojana(APY)

ATAL PENSION YOJANA (APY) is a scheme provided by Indian government to help the weaker section (unorganised section) to enjoy the retirement benefits and pension schemes. It’s always very difficult for the weaker section to meet their needs and thus to help the weaker section to save and help to sustain during their retirement age, the government introduced APY scheme with lower contribution rate and better return. This post provides an overview of APY calculator and how much one need to invest to achieve their goals with APY.

The APY was introduced during the Budget of 2015-16 and the scheme was first implemented from 1^st June 2015. The APY scheme is administered by the PFRDA (Pension Fund Regulatory and Development Authority) and any contribution made under this scheme can be claimed as tax deduction under section 80CCD under the National Pension System (NPS) provisions.

APY CALCULATOR

There are major three factors which affect the quantum of contribution required to achieve the expected benefits:

1. The amount of pension one wants to receive.
2. The age at which one enrols under the APY scheme.
3. Number of years of contribution planned

The lower the age at which one enrols and the more years of planned contribution are provided, the lower is the amount of contribution required to achieve maximum pension benefits.

The below tables will provide details of the minimum amount of contribution to be made each month for expected pension payment.

Points to remember:

1. The amount of contribution is inversely proportional to the age of enrolment of the individual subscriber.
2. The Central Government will make additional contribution of 50% of the total contribution made by the individual subscriber that year or Rs.1000 per annum, whichever is lower to each **eligible subscriber, for a period of 5 years (**Eligible subscribers who enrolled in the APY scheme in between 2015 to 2020).

Note: Individuals who are already covered under any social security benefit (like Provident fund or Employee State Insurance Scheme) are not eligible to receive any government contribution.

3. Under APY scheme, the subscriber must contribute for at least 20 years before claiming the benefits.
4. The minimum contribution must be made on monthly basis. In case the individual is unable to make the respective contribution he or she would deemed as defaulters and penalties would be imposed on the individual.
5. In case of unfortunate death of the subscriber, the entitled nominee will get minimum of the below amount as accumulated corpus fund.

Eligibility for enrolment:

1. The individual must be an Indian citizen and the age of such individual must be in between the limit of 18 to 40 years.
2. The interested individual must have a saving bank account. can enrol themselves under scheme. (The earlier one enrols the lower is the amount of contribution required to get better benefits)

Note: The individual subscriber can continue to contribute up to age of 60 years.

Scheme details:

Under APY scheme, the subscriber needs to open an APY account and start contributing the amount. The Central Government in addition to individual contribution will contribute 50% of the total contribution made that year by the individual subscriber or Rs.1000 per annum, whichever is lower to each **eligible subscriber, for a period of 5 years (in between 2015 to 2020).

Under the rules framed by PFRDA, the Central Government may also authorise State Governments to provide an additional co-contribution to APY subscribers, in their respective states

** Eligible subscriber here is all subscribers who have enrolled under the scheme in between June 1, 2015 and December 31, 2015.

Payment under the scheme:

The subscriber would receive monthly pension (of Rs.1000 or Rs.2000 or Rs.3000 or Rs.4000 or Rs.5000 as opted by the subscriber) during his or her retirement period (after 60 years). The subscriber cannot withdraw any amount till the age of 60 years.

At the age of 60 years the subscriber have 2 option:

1. Withdraw the accumulated fund
2. Opt for monthly pension till the time the person dies.

In case the subscriber dies the accumulated pension corpus would be returned to spouse or the nominee of the subscriber. The amount received by the nominee is not considered as the income of the nominee for the given year.

CONCLUSION:

APY  scheme is a very good opportunity for unorganised as well as organised sector individuals to invest small savings and turn that into bigger returns.

Along with current year tax exemption claim , one can enjoy better returns on pension payment.