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What is Atal Pension Yojana: Know the guidelines to apply ?

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What is Atal Pension Yojana?
October 25, 2023

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The financial security of a pension takes away a huge mental burden off government employees’ minds. However, no such relief is available for those working in the private and unorganised sectors. This is why the Government of India has introduced Atal Pension Yojana (APY), a monthly pension scheme that aims to bring a sense of financial security for every citizen of the country.

What is Atal Pension Yojana?

Atal Pension Yojana is designed to take care of the financial needs of an individual after their retirement out of the money they have saved through the scheme during their work life. The amount received through a monthly pension plan is directly proportional to the amount; they had saved every month under the scheme, as well as their age.

How does Atal Pension Yojana work?

Under this monthly pension scheme, an unorganized sector employee is encouraged to contribute a monthly amount till the age of 60. He or she can opt for a monthly pension plan of Rs 1000, Rs 2000, Rs 3000, Rs 4000 and Rs 5000 and save accordingly. 

Once they retire, the corpus thus built is utilised to pay out regular monthly instalments as the pension. In the event of the beneficiary’s demise, the spouse continues to receive the pension. If they both die, the nominee is entitled to get the remaining corpus in a lump sum. 

Features of Atal Pension Yojana

A scheme with guaranteed monthly returns post-retirement or on the maturity of the policy, Atal Pension Yojana has certain features:

  • Altering contribution and pension amount: You can choose to increase or decrease the monthly contribution to the APY scheme depending on your financial status or needs. This would impact the quantity of corpus and alter the amount to be received as a pension after retirement. 
  • Auto debit of contribution: The subscriber can opt for auto debit of monthly contributions from his bank account linked to the APY scheme. 
  • Entry age bracket: The minimum entry age for the Atal Pension Yojana is 18 years while the maximum is 40 years. This allows a scheme term varying in the range of 42 to 20 years. 
  • Guaranteed pension: One can get a guaranteed monthly payout based on their chosen contribution. 
  • Withdrawal rules: Withdrawal from the scheme before 60 years is allowed only in the case of terminal disease and demise of the subscriber. If he/she dies before 60, the spouse has the option to leave the scheme and get the corpus or choose the pension benefits. Leaving the APY scheme before 60 will entitle one to get only the accumulated amount and the interest accrued. 
  • Penalty payment: Missing out on monthly contributions leads to a penalty cost depending on the amount. The scheme account gets frozen after 6 months of non-payment and terminated after 12 months of default. A refund of the accumulated amount with interest is made in case of termination. 

How to apply for Atal Pension Yojana?

To apply for Atal Pension Yojana, all you need is to visit your bank’s website. Download the APY form, fill in the details, sign and submit online with the relevant documents. Pay directly through net banking and choose the auto-debit option if required. 

And your worries are gone! 

Annuity Service Providers:

PFRDA is a statutory body set up by the Government of India to regulate and develop the pension sector in India. An annuity pension is a type of pension in which the pensioner receives a fixed monthly income as per terms and condition of the plan

The relationship between PFRDA and ASPs (Annuity Service Providers) is that PFRDA is the regulator of the National Pension System (NPS), and ASPs are the entities that provide annuity services to NPS subscribers. When an NPS subscriber reaches the age of 60, they are required to annuitize at least 40% of their pension wealth. They can do this by purchasing an annuity from an ASP that is empanelled by PFRDA

You can select any of the annuity schemes offered by Annuity Service Providers (ASPs) registered with IRDAI and empaneled with PFRDA. HDFC Life is one of the registered ASPs for annuity issuance and further servicing.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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