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Atal Pension Yojana – APY Scheme Eligibility & Benefits

Updated on: Dec 31st, 2022 - 3:35:26 PM

8 min read

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With the successful implementation of Pradhan Mantri Jan Dhan Yojana and embracing a huge population to avail the banking benefits with opening a zero balance account with the continuation of Jan Dhan Yojana, a National Pension Scheme (NPS) which is known as Atal Pension Yojana (“APY”) was affected and passed in the Union Budget of 2015-16 by our honourable Finance Minister Mr. Arun Jaitley.

What is Atal Pension Yojana?

The government has launched Atal Pension Yojana (APY), a pension scheme mainly aimed to create social security for all Indians. It is especially for the poor, the underprivileged, and the unorganised sector, such as maids, delivery boys, gardeners, etc. The APY scheme replaced the previous Swavalamban Yojana, which was not much accepted.

The goal of the scheme is to ensure that no Indian citizen has to worry about any illness, accidents or diseases in old age, giving a sense of security. Private sector employees or employees working with such an organization that does not provide them pension benefit can also apply for the scheme.

There is an option of getting a fixed pension of Rs 1000, Rs 2000, Rs 3000, Rs 4000, or Rs 5000 on attaining an age of 60. The pension will be determined based on the individual’s age and the contribution amount. The contributor’s spouse can claim the pension upon the contributor’s death, and upon the death of both the contributor and his/her spouse, the nominee will receive the accumulated corpus. However, if the contributor dies before completing 60 years of age, the spouse can either exit the scheme and claim the corpus or continue the scheme for the balance period.

As per the investment pattern laid down by the government of India, the collected amount under the scheme is to be managed by the Pension Funds Regulatory Authority of India (“PFRDA”).

The Government would also make a co-contribution of 50% of the total contribution, or Rs. 1000 per annum, whichever is lower, to all eligible subscribers who had joined between June 2015 and December 2015 for a period of 5 years, i.e., for financial years 2015-16 to 2019-20. The subscribers should not be part of any other statutory social security schemes (E.g., Employee’s provident fund) or should not be paying income taxes to avail Government’s co-contribution.

Eligibility for Atal Pension Yojana?

To avail benefits from the Atal Pension Yojana, you must fulfil the below requirements:

  1. Must be a citizen of India.
  2. Must be between the age of 18-40
  3. Should make contributions for a minimum of 20 years.
  4. Must have a bank account linked with your Aadhar
  5. Must have a valid mobile number

Those who are availing benefits of Swavalamban Yojana will be automatically migrated to Atal Pension Yojana.

How to Apply for Atal Pension Yojana?

Follow these steps to avail the benefits of APY

  1. All nationalized banks provide the scheme. You can visit any of these banks to start your APY account.
  2. Atal Pension Yojana forms are available online and at the bank. You can download the form from the official website.
  3. The forms are available in English, Hindi, Bangla, Gujarati, Kannada, Marathi, Odia, Tamil, and Telugu.
  4. Fill up the application form and submit it to your bank.
  5. Provide a valid mobile number, if you haven’t already provided to the bank.
  6. Submit a photocopy of your Aadhaar card.

You will receive a confirmation message on approval of the application.

Monthly Contributions

The monthly contribution depends upon the amount of pension you want to receive upon retirement and also the age at which you start contributing. 

The following table mentions how much you need to contribute per annum based on your age and pension plan.

APY - Monthly contribution

How to Withdraw from APY?

Withdrawal from APY scheme is not permitted before 60 years of age, but exit may be allowed in exceptional circumstances like death of beneficiary or terminal disease. So the actual exit scenarios are: 

  • Attaining 60 years of age: 100% annuitisation of pension wealth to subscriber
  • Death of subscriber: Pension will be available to spouse and on death of spouse, pension corpus will be returned to the nominee

Penalty on Defaults

If you default on your payments, your bank will collect some additional amounts as follows:

• Re. 1 per month for contribution upto Rs. 100 per month. 

• Re. 2 per month for contribution upto Rs. 101 to 500/- per month. 

• Re 5 per month for contribution between Rs 501/- to 1000/- per month. 

• Rs 10 per month for contribution beyond Rs 1001/- per month.

Important Facts to know about APY

  1. Since you will be making periodic contributions, the amounts will be debited automatically from your account. You need to make sure that you have sufficient balance in your account before each debit.
  2. You can increase your premium at your will. You just have to visit your bank and talk to your manager and make the necessary changes.
  3. In case you default on your payments, a penalty will be levied. A penalty of Rs. 1 per month for a contribution of every Rs. 100 or part thereof.
  4. In case you default on your payments for 6 months, your account will be frozen and if the default continues for 12 months, the account will be closed and the remaining amount will be paid to the subscriber.
  5. Early withdrawal is not entertained. Only in cases like death or terminal illness, the subscriber, or his/her nominee will receive the entire amount back.
  6. In the event that you close the scheme before the age of 60 for any other reason, only your contribution plus interest earned will be returned. You will not be eligible to receive the government’s co-contribution or the interest earned on that amount.

FAQs on APY ( Atal Pension Yojana )

Can I apply for APY online?

No, currently there are no provisions to apply for APY online. You need to go to your bank and fill out the forms.

What are the documents required to apply for the APY Scheme?

To apply for the APY scheme, you need to fill out the form and submit a photocopy of your Aadhar Card. No other documents are required.

How will I know if the pension scheme is activated?

You will receive an SMS alert on your registered mobile number, informing you when the pension scheme is activated.

When is the last date to join the Atal Pension Yojana Scheme?

The Atal Pension Yojana Scheme does not have a last date to join. Submit your application before June 1st to join the scheme for the coming year. The scheme is renewed on June 1st every year.

What are the minimum and maximum age to join this scheme?

The minimum age is 18 years. The scheme is also open to college students. The maximum age is 40 years. It is because the minimum contribution period is 20 years. At the age of 60, you will start receiving your pension.

Is my money safe? Will the scheme be changed when the government changes?

The Atal Pension Yojana scheme is passed by the Parliament of India in the budget session. The scheme will not be discontinued if there is a change in the Government, and your contribution is safe. Any succeeding Governments has the right to only change the name of the pension scheme.

How many APY accounts can I open?

A subscriber can only open one unique account under this APY scheme. 

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