If you are self-employed, or work in the unorganised sector, then you can avail the benefits of the Atal Pension Yojana (APY), a guaranteed pension and social security scheme, by the union government. This scheme provides a pension ranging from Rs 1,000 to Rs 5,000, depending upon the age and contributions of any applicant. Even if you are a private sector employee working for an organisation which does not provide for pension benefits, you can avail of the APY. The scheme, which subsumed the previous Swavalamban Yojana of 2010-2011, was passed in the union budget of 2015-2016.
Why the scheme was required?
The Atal Pension Yojana focussed on all citizens in the unorganized sector, who were not a part of the National Pension System (NPS) administered by the Pension Fund Regulatory and Development Authority (PFRDA). According to the 66th round of NSSO Survey of 2011-12, 47.29 crore workers were employed in the unorganized sector. This large majority was around 88% of the total working population in the country. To address the longevity risks among the workers in unorganized sector, besides providing them with the requisite encouragement to voluntarily save for their retirement,the government introduced the scheme. This scheme provided pension benefits to all workers, who were hitherto not in the ambit of PFRDA.
Eligibility for APY: Workers in the unorganized sector who are not members of any statutory social security scheme,and who are not income taxpayers are eligible to become beneficiaries of the scheme. Other requirements include the applicant being a citizen of India, between 18 and 40 years of age. Having a bank account and active mobile phone number, both linked to Aadhar number is also mandatory for availing the scheme. You must also be willing to contribute for a minimum period of 20 years.
The government had also announced that it would contribute 50% of the total contribution or Rs 1000 per annum, whichever was lower, to the beneficiaries of the scheme. Government contribution, however, was only for five consecutive years, from 2015-2020.
Steps to avail benefits of the APY:
Step 1. You have to visit any nationalized bank and fill the form. The forms are also available online. You can download it, and submit it to the bank. The forms are available in different languages, including English, Hindi, Marathi, Tamil, Telugu, Kannada and Odia. Alternatively, you can also fill it online via netbanking.
Step 2: Fill the form with all required details, including your active mobile phone number and submit it to the bank. Do not forget to submit a copy of your Aadhar number for KYC verification. For online applications, provide the requisite details and documents.
Step 3: You will receive a confirmation message on SMS when your application is approved.
Step 4: Start contributing in the scheme, which has auto-debit facility. You must remember that a late fine ranging from Rs 1 to Rs 10 will be charged if your account does not have the requisite balance on the due date. If you discontinue your contributions, your account will be frozen after six months, and deactivated after a year. After two years, the account will be closed.
Monthly contribution for the APY: Monthly contributions are contingent upon the age at which you start making contributions, besides the amount ( between Rs 1,000 to Rs 5,000) that you wish to receive after retirement. You can refer to the chart given below to get a clear idea about the pension benefits you will receive:
Monthly contributions for APY, Source: Cleartax.in
What happens if a subscriber dies before 60 years?
If the contributor dies before completing 60 years of age, the spouse is also given an option to either exit the scheme and claim the corpus or continue the scheme for the balance period. If the subscriber dies after 60 years, then the spouse can receive the pension benefits. In case of death of both the spouse and the subscriber, the nominee will receive the retirement benefits.
Other features of the Atal Pension Yojana:
- Application can be submitted both online and offline : You must remember that online facility for application is also available for an existing savings bank account holder to apply for the scheme. You can use your saving account to apply online via net banking. In case of not having an existing account, you have to visit a nationalised bank, open a savings account, and then apply for the scheme.
- Last date to apply for the scheme: There is no last date for applying to become a beneficiary of the scheme. As the scheme is renewed before June 1 during each financial year, you must submit your application before June 1 in any financial year to become a beneficiary of the scheme.
- Tax benefits: Contributions paid in APY can be claimed for income tax deduction under Sections 80C and 80CCD(1)of the Income Tax Act. This is one among the key benefits of the APY.
Atal Pension Yojana is a safe and reliable guaranteed pension scheme, which provides you monthly pension ranging from Rs 1,000 to Rs 5,000. You can avail of the benefits of the APY through Finserv MARKETS, which come with no hidden costs and complete transparency. Opening an account here is a breeze with the easy online process. The entire process is paperless, thus saving you from the need of tedious paperwork to avail the scheme. Along with flexibility of choice in selecting investment options, you can track and operate your account from anywhere.
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