Atal Pension Yojana – APY Scheme Details, Benefits & Eligibility

Previously called the Swavalamban Yojana, Atal Pension Yojana or APY is a pension plan launched by the central government targeted towards the unorganised sector. It was originally launched in 2010-11. Later on, it was relaunched in 2015 fiscal budget.

Before May 2015, pension scheme was available to only 20% of the Indian population. This scheme was launched to bring more individuals under the pension umbrella of National Pension System (NPS) and provide them with retirement benefits.

What is Atal Pension Yojana scheme?

  • History of the Atal Pension Yojana scheme

Atal Pension Yojana was solely launched to encourage the unorganised working class people of India. According to the 66th Round of NSSO Survey 2011-12, they contribute to 88% of the entire labour community of 47.29 Crores. This scheme aims to provide a secured future for them after retirement. Since they did not have a proper pension plan, the 2010-11 government launched Swavalamban Yojana to provide the unorganised sector with formal pension benefits. But this scheme failed as there was no guarantee of pension benefits after attaining an age of 60 years.

The government aimed to take measures and amend the Insurance and Pension sectors via universal social security schemes, especially for the underprivileged in the fiscal year 2015-16. Thus, Atal Pension Yojana scheme was launched. Its main objective was to provide definite pension, depending on the time period and the amount of contribution.

  • How does the Atal Pension Yojana scheme work?

When launched, the Atal Pension Yojana solely focused on the unorganised sector. The unorganised sector consists mainly of the underdeveloped sections of our country. They have a below-par income with no other benefits like provident fund, paid leaves, holidays or even medical assistance. They do not abide by the government rules and regulations regarding employment conditions. The Pension Fund Regulatory and Development Authority (PFRDA) under the National Pension System (NPS) aims to target this sect of people including household help, delivery support, etc. and uplift their living conditions post-retirement and provide security for them from any unforeseen circumstances via the APY scheme.

Individuals who have registered under the Atal Pension Yojana scheme will have to submit a minimum of Rs. 1,000 as a contribution to their pension fund. This is a 50-50 partnership scheme. The government will pay either Rs. 1000 or 50% of the amount contributed by the pension account holder, whichever is lower.

  • Benefits of Atal Pension Yojana

After the age of 60, a definite amount of pension will be made available, a minimum of Rs. 1,000 and a maximum of Rs. 5,000 per month. You can join the APY scheme at 18 years of age, the maximum bar to join is 40 years. A minimum time period to contribute for your pension under the APY scheme is 20 years. So, the younger you start investing, the more is your contribution to your pension. It is one of the best investment options in India that the government has launched so far.

Since this scheme was launched in 2015, the government scheme was such that they will provide 50% of the individual pensioner’s contribution but only up to a period of 5 years, i.e., till 2019-20 fiscal year. The contribution that the government was making for the non-tax paying contributors, who joined the NPS within a period of 1st June 2015 to 31st December 2015, stands to be discontinued after 2015.

  • Eligibility criteria to avail Atal Pension Yojana

Criteria of being eligible for opening an Atal Pension Yojana account are very simple.

  • Indian citizens can apply.
  • Age limit of 18 and 40.
  • Subscriber must contribute to the pension for a minimum period of 20 years.
  • If already enrolled in Swavalamban Yojna, contributors are automatically enrolled under the APY scheme.

The government has launched several pension schemes for the benefit of its citizens and APY is one of the best investment options in India for such individuals. Availing a government-sanctioned pension plan is indeed beneficial. But opting for a fixed deposit plan is a better option for a secured life after the age of retirement. Financial institutions like Bajaj Finance offer secured Fixed Deposits which offer attractive rates of interest.

There are numerous ways how fixed deposits can be better than other investment options for reasons such as guaranteed returns and substantial interest rates.

But, before opting for any scheme, either Atal Pension Yojana or fixed deposits, you should do a proper background search and learn facts that you probably didn’t know about fixed deposits. Refer to leading financers and look for additional benefits other than just attractive rates of interest.