Definition: Atal Pension Yojana, popularly known as APY Scheme is the government pension scheme offered to those individuals who are employed in rural and the unorganized sectors and are not the members of any social security scheme.
The Atal Pension Yojana was named after Mr. Atal Bihari Vajpayee, ex-Prime Minister of India. The aim of this policy is to provide the fixed pension to all the Indians, such that no one has to worry about money in his/her old age. The following are the main features of APY Scheme:
- All the bank-account holders, who are not a part of any social security scheme and fall in the age bracket of 18 to 40 years can apply for the Atal Pension Scheme. This shows that an individual is required to contribute for 20 years or more.
- Under this scheme, an individual gets a fixed amount of pension, i.e., Rs 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000 and Rs. 5,000, once he attains the age of 60. The amount of the pension is determined on the basis of the age and the premium contributions of the individual.
- The government of India also contributes 50% of the subscriber’s amount or Rs 1,000, whichever is lower, for five years i.e. from 2015-16 to 2019-20 to each eligible the subscriber who join the scheme before 31 December 2015 and are not the income tax payers.
- To enroll for the Atal Pension Scheme, an individual must have a bank account. He must have duly filled in the authorization form that includes the complete personal details of the account holder such as, account number, spouse and nominee details and the authorization of getting the contribution amount automatically debited from his account.
- The premium paid under the scheme can be claimed for deductions under the section 80 CCD of the Income Tax Act.
- In case the premium is not paid for six months the account gets frozen, in case the payment is not made for twelve months, it gets deactivated and finally gets closed if the payment is not made for 24 months.
- An individual has to make the payment till he attains the age of 60, before that he cannot exit the Atal Pension Yojana scheme. The exit from the scheme is only permissible in the event of the beneficiary’s death.
Note: The premium can be paid either monthly, quarterly or half-yearly depending on the convenience of the subscriber.