The Atal Pension Yojana (APY), the Central Govt Pension Scheme, is a government-initiated pension plan providing financial security to unorganized workers.
Subscribers can earn a guaranteed monthly pension ranging from ₹1,000 to ₹5,000 upon retirement. In India, government employees receive a pension after retirement.
Pension plans are also available for private-sector employees. However, individuals working in the unorganized sector may face financial insecurity after reaching 60 and being unable to work.
The government has introduced the ‘Atal Pension Yojana’ scheme in response to this issue. This scheme allows those working in the unorganized sector to secure a pension in old age by enrolling in the program. In this article, we explore the comprehensive details of the Atal Pension Yojana scheme.
Atal Pension Yojana News:
The central government is expected to increase the minimum pension under the Atal Pension Yojana (APY) to ₹10,000. The proposal is currently awaiting approval and is likely to be announced in the Union Budget for 2025, which is set to be presented on February 1.
A government official was quoted in the media saying, “The proposal to double the minimum pension under the Atal Pension Yojana is almost ready for approval. It is likely to be announced in the Budget 2025. This will provide financial stability and security for the subscribers.”
What is the Atal Pension Yojana?
Prime Minister Narendra Modi launched the Atal Pension Yojana on May 9, 2015. This social security scheme aims to provide financial security to people experiencing poverty and workers in the unorganized sector during their old age.
The scheme is named after former Prime Minister Atal Bihari Vajpayee. Currently, subscribers can receive a maximum pension of ₹5,000, and the government has decided to double this amount.
As of October 2024, over seven crore people have enrolled in the Atal Pension Yojana, with more than 56 lakh new subscribers registering in the financial year 2024-25.
Individuals aged 18 to 40 are eligible to join this scheme. After reaching 60, subscribers can receive a pension ranging from ₹1,000 to ₹5,000 per month, depending on their contributions.
If a subscriber passes away, the same pension amount is paid to their spouse. If the spouse also passes away, the accumulated pension amount is given to the nominee.
Participants in this scheme also receive tax exemptions. Enrollment is available through government and private banks, rural banks, and post offices, both online and offline.
Who Can Enroll in APY?
The scheme is available to individuals aged 18 to 40. Contributions are deducted from the subscriber’s bank account, and the amount deducted varies depending on age and desired pension amount.
Subscribers must contribute regularly until they are 60 to receive a fixed monthly pension.
Key Features of APY
- Deferred Pension Scheme: APY requires continuous contributions until the age of 60. Afterward, a fixed pension is paid out monthly.
- Contribution Flexibility: Subscribers can choose their monthly, quarterly, or half-yearly contribution frequency. The amount ranges from ₹42 to ₹1,454 per month.
- Guaranteed Returns: APY offers an 8% fixed return and potentially higher earnings if the returns exceed 8% at maturity. This fixed rate ensures stability, while the NPS offers variable returns based on market performance.
Benefits of APY
- The scheme guarantees a minimum pension, with the government covering any shortfall in returns.
- If actual returns exceed expectations, additional benefits are passed on to the subscriber.
- Additionally, contributions made under APY qualify for tax deductions under Section 80CCD(1) of the Income-tax Act, 1961.
| Name of the scheme | Atal Pension Yojana |
|---|---|
| Website | https://npscra.nsdl.co.in/ |
| Scheme Portal | APY scheme |
| APY Details | APY Scheme Details |
APY vs. NPS
The Pension Fund Regulatory and Development Authority (PFRDA) regulates the Atal Pension Yojana and the National Pension System (NPS).
While APY offers a fixed pension with guaranteed returns, NPS provides a variable pension linked to market performance, offering the potential for higher returns based on the chosen investment plan.
Why APY is Essential
APY offers a reliable pension option for private-sector employees, especially those with lower incomes. With an investment as low as ₹7 per day, individuals can secure their financial future with a government-backed pension plan. This scheme is particularly beneficial for those who might not have access to other retirement savings options.
How to Manage Your APY Account
After registering, subscribers must ensure sufficient funds are available for contributions in their linked savings account. In insufficient funds, the APY allows for delayed payments with minimal interest. Continuous defaults can lead to account closure once the balance reaches zero, but flexibility is offered to adjust contribution amounts once a year.
Tax Benefits and Financial Security
APY contributions are eligible for tax deductions, and the scheme guarantees a fixed pension, ensuring financial security during retirement.
The government supports the scheme by covering any shortfalls, making it a reliable option for retirement planning.
The Atal Pension Yojana is an excellent choice for individuals seeking a stable and secure retirement plan, especially those in the unorganized sector.
With guaranteed returns, tax benefits, and government backing, APY provides a reliable financial cushion for old age.