Atal Pension Yojana (APY) for Social Security in India
Financial inclusion, social security, and low-cost benefits for the masses have been high on the NDA government’s agenda. Ever since the NaMo government’s ascent to the centre, PM Modi, FM Jaitley, and the Cabinet have worked relentlessly towards promulgation of new schemes that make financial security for the common man. The first step towards achievement of social security was the rollout of the Pradhan Mantri Jan Dhan Yojana (PMJDY). With Phase I being declared a major success and 1.8 crore accounts having been opened across the country, the government has flagged off three new schemes on 9 May 2015 – two insurance schemes (Pradhan Mantri Jeevan Jyoti Bima Yojana, and Pradhan Mantri Suraksha Bima Yojana), and a pension scheme (Atal Pension Yojana). This is called Phase II of the PMJDY, since it was important to get people into mainstream banking before any benefits can be extended to them.
Atal Pension Yojana
“As our young population ages, it is also going to be pension-less. Encouraged by the success of the Pradhan Mantri Jan Dhan Yojana, I propose to work towards creating a universal social security system for all Indians that will ensure that no Indian citizen will have to worry about illness, accidents or penury in old age”, said Finance Minister Jaitley in his February 2015 Budget speech. In keeping with this ideal, a National Pension Scheme, the Atal Pension Yojana will be effective from 1 June 2015. The scheme intends to bring pension benefits to allow people of the unorganised sector to enjoy social security with minimum contribution per month.
People who work in the private sector or employed in occupations that do not give them the benefit of pension can apply for the scheme. They can opt for a fixed pension of INR 1,000 or 2,000 or 3,000 or 4,000 or 5,000 on attaining the age of 60. The amount of contribution and the individual’s age will determine the pension. Upon the contributor’s death, the spouse of the contributor can claim the pension and after the spouse’s death the nominee will be returned the corpus accrued.
The amount collected under the scheme is to be managed by Pension Funds as per the investment pattern specified by the Government. Individual applicants will have no choice of pension funds or investment allocation.
Benefits of Atal Pension Yojana
The Atal Pension Scheme will bring security to ageing Indians while at the same time promote a culture of savings and investment among the lower and lower middle class sections of society. One of the greatest benefits of the scheme may be enjoyed by the poorer sections of society. The government of India has decided to contribute 50 percent of the user’s contribution or INR 1,000 a year (whichever is lower) for a period of five years. This contribution will, however, be enjoyed only by those who are not income tax payers and those who join the scheme before 31 December 2015.
Who is Eligible?
The Atal Pension Yojana (APY) is open to all Indians between the age of 18 and 40. This allows an individual to contribute for at least 20 years before reaping the benefits of the scheme. Any bank account holder who is not a member of any statutory social security scheme can avail of the scheme.
All existing members of the government’s ‘Swavalamban Yojana NPS Lite’ will automatically be migrated to the Atal Pension Yojana. It will now replace the Swavalamban scheme, which did not gain much popularity across the country.
How to Enroll?
To sign up for the Atal Pension Yojana, an account holder must fill in an authorisation form and submit it to his/her bank. The form will require complete details including account number, spouse and nominee details, and authorisation for auto debit of contribution amount. Account holders signing up for the scheme need to ensure that sufficient balance is maintained in the account every month, failing to do so will attract a monthly fine of –
- INR 1 for monthly contribution up to INR 100
- INR 2 for monthly contribution between INR 101 and INR 500
- INR 5 for monthly contribution between INR 501 and INR 1,000
- INR 10 for monthly contribution beyond INR 1,001
If no payment is made towards the scheme
- for six months, the holder’s account will be frozen
- for 12 months, the holder’s account will be deactivated
- for 24 months, the holder’s account will be closed
For those who does not have a bank account: A person needs to open a bank account first by submitting the KYC document and Aadhar card. He/she is also required to submit the APY proposal form.
Exiting the scheme: Under ordinary circumstances, an account holder who has enrolled for the Atal Pension Yojana will not be able to exit the scheme before the age of 60. Exiting the scheme is only possible in special circumstance such as in the event of the death of the beneficiary.
The application form can be downloaded from http://www.jansuraksha.gov.in/FORMS-APY.aspx. The forms are available in different languages – English, Hindi, Gujarati, Bangla, Kannada, Odia, Marathi, Telugu and Tamil.
Indicative Contribution for Various Pension Options (in INR)
|Entry Age||Years of Contribution||Monthly Pension INR 1000||Monthly Pension INR 2000||Monthly Pension INR 3000||Monthly Pension INR 4000||Monthly Pension INR 5000|
*Data from Atal Pension Yojna brochure
Launch Across the Country
The Atal Pension Scheme and the other insurance schemes were launched on 9 May, simultaneously by Union and Chief Ministers. Indian Prime Minister Narendra Modi launched the scheme from Kolkata. Launch functions were held at about 116 locations across the country including state capitals and a number of district headquarters. Post its launch, 41,124 people have already registered for the scheme as on 11 May 2015.
Click here to view Atal Pension Yojana(APY) in Hindi – अटल पेंशन योजना (एपीवाई)