What is Atal Pension Yojana (APY)? Eligibility, Benefits, and More

The government of India is highly concerned about the security of the old-age income of the unorganised sector workers. It is focused on encouraging and enabling them to join the National Pension System (NPS). However, many of India's workforce is in the unorganised sector with no social security coverage. Keeping this in mind, the Government of India introduced the Atal Pension Yojana scheme in 2015 to provide pension benefits to this segment. 

To know about Atal Pension Yojana scheme details like APY full form, its eligibility, benefits, etc, read on to:

What is Atal Pension Yojana (APY)?

The Atal Pension Yojana (APY) is a government-backed pension scheme that provides financial security to people working in the unorganised sector by ensuring they receive a fixed pension after age 60.

Under this scheme, subscribers can contribute regularly to receive a guaranteed pension of ₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 per month post-retirement. The amount depends on the contribution made and the age at which the individual starts investing in the scheme.

The central government also contributes 50% of the total contribution or ₹1,000 per annum (whichever is lower) for eligible subscribers who joined the PM pension yojana before March 31, 2016.

Atal Pension Yojana Benefits

The Atal Pension Yojana scheme provides the following key benefits to subscribers:

• Government-guaranteed minimum pension amount: Subscribers are guaranteed a minimum monthly pension from the age of 60 for life. The minimum pension amount is ₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 per month, depending on the contribution amount.
• Spouse also receives guaranteed minimum pension: After the subscriber's demise, their spouse will receive the same minimum monthly pension for life or until their demise.
• Nominee receives pension wealth corpus: After the subscriber and spouse's demise, the nominated beneficiary will receive the entire pension wealth corpus accumulated until the subscriber turns 60 years of age.
• A spouse can continue the scheme after the subscriber's death: If the subscriber passes away before 60, their spouse can continue making APY contributions in the account for the remaining vesting period until the subscriber turns 60. After this, the spouse will receive the minimum pension amount for life.
• Government funds inadequacy in returns: If the pension wealth corpus earns lower than estimated returns and is insufficient to provide the minimum guaranteed pension, the government will fund the gap.
• Enhanced pensionary benefits possible: The subscriber receives enhanced pension payouts if investment returns are higher than required for the minimum guaranteed pension.

Eligibility Criteria for Atal Pension Yojana

To avail the benefits of the Atal Pension Yojana scheme, an individual must meet the following eligibility conditions:

1. Age Requirement:

• The applicant must be between 18 and 40 years old.
• Since APY requires a minimum contribution period of 20 years, individuals above 40 are not eligible.

2. Bank Account Requirement:

• The subscriber must have an active savings bank account.
• Contributions are auto-debited from the account, making timely deposits crucial.

3. Nationality:

• The applicant must be an Indian citizen.

4. Unorganised Sector Focus:

• It is primarily designed for workers in the unorganised sector, but any eligible Indian citizen can apply.

5. Aadhaar & Mobile Number:

• While Aadhaar is not mandatory at the time of enrollment, it is strongly recommended to be linked to the APY account.

What is the Procedure for Opening an APY Account?

The process of applying for the Atal Pension scheme is as follows:

• Go to your bank branch or nearest post office where you have a savings account. If you do not have an existing account, open a new savings account.
• Provide your savings bank account details and Aadhaar/mobile number (optional) to the bank/post office staff.
• With assistance from the staff, fill out the APY application form. Make sure to select your desired monthly pension amount—₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 per month from age 60.
• Ensure you always maintain sufficient balance in your savings bank account to allow smooth transfer of the APY monthly/quarterly/half-yearly contributions. The contributions will be auto-debited as per your selected periodicity.
• Submit your completed application form along with KYC documents for processing. After your application is successful, you will receive an acknowledgement slip.
• Once enrolled, you can monitor your APY account periodic statements to keep track of the accumulation of pension wealth. Make additional voluntary top-up contributions if desired to enhance your pension amount.

Withdrawal Procedure of APY

Upon Turning 60 Years

The APY subscriber can submit a request to start receiving the guaranteed minimum monthly pension (₹1,000 to ₹5,000 as opted initially) after completing 60 years of age. If the pension wealth corpus earns returns higher than the guaranteed rate, an enhanced monthly pension is paid. Upon the subscriber's death, the spouse continues to receive the same pension for life. After the demise of both, the accumulated pension wealth until the subscriber reaches 60 years of age is given to the nominee.

Death After 60 Years

Unfortunately, if the subscriber passes away after 60 years of age, the spouse continues to receive the same pension amount monthly for life. After the demise of the subscriber and spouse, the accumulated pension wealth is paid back to the nominee.

Voluntary Exit Before 60 Years

A subscriber who has received government co-contribution subsidies can voluntarily exit APY before 60 years. In such a case, only the subscriber's contributions and actual income earned on them are returned; the government contributions and income earned on them are not paid back.

Death Before 60 Years

If the subscriber dies before 60 years of age, the spouse has the option to either:

• Continue the APY contributions in the account for the remaining vesting period until the subscriber turns 60. Subsequently, the spouse receives a guaranteed monthly pension.
• Withdraw the complete pension wealth corpus accumulated to date. This amount is paid back to the spouse/nominee.
• That covers the key scenarios of withdrawing one's pension wealth under APY before or after retirement or upon an untimely death.

Other Important Facts about APY

• Nominee declaration mandatory: Subscribers must provide nominee details, with the spouse as the default nominee if married. Unmarried subscribers can update spousal details later.
• One account only: A subscriber can only open one APY account with a unique PRAN. Multiple accounts are not allowed.
• Pension amount change allowed: Subscribers can decrease or increase their pension amount once annually during accumulation.
• Regular account alerts: Periodic SMS alerts inform about PRAN activation, account balance, contribution credits, etc. Annual physical account statements are also provided.
• For Indian citizens only: APY is open only for Indian citizens within specified age groups based on pension amount.
• Auto-debit facility: Contributions are deducted uninterruptedly despite residence/location changes. Frequency (monthly/quarterly/half-yearly) can be changed once annually in April.

Spouse/nominee details can be updated during the accumulation phase. PAN/Aadhaar details of spouses and nominees can also be provided, though they are not mandatory.

Conclusion

The Atal Pension Yojana (APY) is a lifeline for millions of unorganised sector workers in India, providing a reliable pension after retirement. With affordable contributions, tax benefits, government support, and a guaranteed pension, APY is an excellent initiative for securing old-age financial independence.

If you haven't yet enrolled in APY, now is the right time to invest in your future and ensure a dignified, financially stable life after 60.

FAQs

1. Who can join the Atal Pension scheme?

Any Indian citizen between 18 and 40 years old with a savings account with a bank or post office can join APY. There is no income ceiling for eligibility. APY is focused on providing old-age income security for workers in the unorganised sector. However, any eligible Indian within the specified age group can enrol.

2. What is the minimum and maximum pension amount under APY?

Subscribers can receive a guaranteed minimum monthly pension of ₹1,000 to ₹ 5,000 from the age of 60, depending on their contribution amount. The minimum pension is ₹1,000 per month. The maximum pension amount allowed currently under APY is ₹5,000 per month.

3. Does the government contribute anything towards APY?

Yes, the government co-contributes 50% of the total contribution or ₹1,000 per annum, whichever is lower, for those Atal Pension scheme subscribers who joined the scheme before March 31, 2016. The government co-contribution is available for those eligible for 5 years from FY 2015-16 to FY 2019-20. It encourages people to start securing their retirement early.

4. Can I have more than one APY account?

No, each APY subscriber is allotted a unique Permanent Retirement Account Number (PRAN) and can have only one APY account linked to it. Multiple APY accounts for a single individual are not allowed.

5. What happens to the APY account if the holder dies before age 60?

If the APY subscriber unfortunately passes away before reaching 60 years of age, their spouse has two options:

• Contribute to the APY account for the remainder of the vesting period until the subscriber turns 60 and subsequently receives the guaranteed monthly pension.
• Withdraw the complete pension wealth corpus accumulated in the account until date. This entire amount is paid back to the spouse or nominated beneficiary.

6. Can I voluntarily exit APY before turning 60?

Yes, APY subscribers can voluntarily exit the scheme before turning 60. However, in such cases, only the contributions made by the subscriber and the actual interest earned are returned. The government's co-contributions and interest earned on those are not paid back to the subscriber.

Written by Bruhadeeswaran R.

Bruhadeeswaran R. is a B2B content expert with 14+ years of experience, specializing in National Pension System (NPS), PAN, DPI, eSignPro, and Central KYC. As Editor and Lead Content Writer at Protean eGov Technologies, he simplifies complex e-governance topics through engaging blogs, reports, and digital content.