Atal Pension Yojana Scheme Explained

Learn more about the Eligibility, Benefits and Features

The Atal Pension Yojana scheme aims to provide financial security to individuals working in an unorganised sector after their retirement. The Government of India launched this pension scheme in 2015-16 to offer financial assistance to private employees as well who do not enjoy pension benefits.

In case you are not aware of the details of what the Atal Pension Yojana scheme is, please continue reading to learn more.

The primary purpose of the Atal Pension Yojana plan is to encourage the beneficiaries to make a monthly contribution to avail post-retirement allowance benefits. The Central Government also aims to provide 50% of the total contribution a worker makes to the scheme. This is valid for candidates who applied before 31st December 2015.

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As mentioned above, being a beneficiary of the Atal Pension Yojana scheme, you can enjoy a Government contribution. However, taxpayers and individuals availing other social security schemes will not be able to benefit from the Government's co-contributions. Following is the list of enactments under which entitled individuals cannot avail the benefit:

• Assam Tea Plantation Provident Fund and Miscellaneous Provision, 1955.
• Jammu and Kashmir Employees’ Provident Fund & Miscellaneous Provision Act, 1961.
• Seamens' Provident Fund Act, 1966.
• Employees' Provident Fund & Miscellaneous Provision Act, 1952.
• The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948.

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Now that you have completed learning about how Atal Pension Yojana works, let us delve into these scheme’s benefits.

Here are the top Atal Pension Yojana benefits to consider before enrolling under this scheme.

Guaranteed Pension

Beneficiaries of this scheme will receive a minimum monthly pension payment ranging from ₹1,000 to ₹5,000. You can increase or decrease this pension amount once a year. Also, the Pension Funds Regulatory Authority of India regulates the pension scheme. Therefore, it curbs all risks of monetary loss and ensures receipt of a guaranteed pension amount after you retire.

Regular Stream of Income Post-retirement

This scheme is beneficial to meet costly medical requirements and other expenses common in old age.

Facility to Appoint Nominees

If the beneficiary dies, his/her spouse will receive the pension benefits. If the candidate dies before 60 years, a spouse can either terminate the scheme or continue to maintain the account under his/her name and receive a similar pension amount. In case both die, a nominee is allowed to receive the benefits.

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Private Sector Employees Can Also Enjoy the Benefits

In case you are a private employee and not covered by other pension benefits, you can apply for this scheme as well.

Tax Benefits

Enjoy Atal Pension Yojana tax benefits under Section 80CCD of the Income Tax Act. The maximum tax exemption limit is 10% of the total income up to ₹1.50 lakh under Section 80CCD (1). Moreover, you are eligible for an additional Atal Pension Yojana tax exemption of ₹50,000 per annum under Section 80CCD (1B) against a contribution of ₹50,000 per annum. However, tax laws are subject to periodical changes. Therefore, you can always consult a professional to get more insights into applicable deductions.

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Flexible Subscription

This scheme allows applicants to opt for monthly, quarterly or half-yearly subscriptions.

Take a look at the following Atal Pension Yojana features before applying under this scheme:

Auto-debit Facility

This scheme allows you to link your bank account to the Atal Pension Yojana scheme. The monthly payment is automatically debited from your account. Beneficiaries must ensure sufficient balance in their savings bank account to avoid payment failure, which leads to a penalty payment.

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Withdrawal Policy

As an applicant, you are eligible to close the scheme with your concerned financial institution after attaining 60 years. The Government also entertains early withdrawal in case of terminal illness or death. However, you will only receive your cumulative contributions and earned interest if you withdraw from the scheme before turning 60.

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Terms of Penalty

For delayed monthly contributions, you must pay a penalty charge. Take a look at the penalty charges against their respective monthly contributions:

• ₹100: Penalty of ₹1.
• ₹101-₹500: Penalty of ₹2.
• ₹500-₹1,000: Penalty of ₹5.
• ₹1000 and above: Penalty of ₹10.

Note that if you fail to provide monthly contributions for 6 consecutive months, the Government will freeze your account. If it continues for a year, the Government will deactivate it and it will be closed after 24 months.

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Age Limit

Candidates aged 18-40 years are eligible to invest in the Atal Pension Yojana scheme. Hence, if you are a recent graduate or have just taken admission in a college, you can ensure a risk-free retirement phase by investing in this scheme. Also, individuals in their 30s are eligible to make contributions for the next 30 years to secure financial stability after attaining 60.
In addition, you must have a savings bank account which must be linked with your Aadhaar card number or registered mobile number. You also must have a contribution of minimum 20 years.

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The monthly contribution is based on your entry age of investment and the pension option you choose. Go through the following table to understand the monthly payments and the expected return you can get: