Investment Guide- Series 1-Part 3- ATAL PENSION YOJANA

Retirement planning should be the most important goal of financial planning for everyone but sadly and truly only a few individuals plan for it. Main reasons for this may be negligence and non-availability of suitable pension plans.

Attractive part of APY is its guaranteed pension for subscriber and his/her spouse and the corpus fund for the nominee.

The Government of India (GOI) was concerned about the old age income security of the working poor and middle class. They were focused on encouraging and enabling them to save for their retirement. To address the longevity risks among the workers in unorganized sector and to encourage the workers in unorganized sector to voluntarily save for their retirement, ATAL Pension Yojana was introduced as a new scheme by GOI in 2015-16 Budget.

The APY is focussed for all citizens in unorganised sector. The scheme is administered by PFRDA through NPS architecture.

Who can open a APY account?

1. Your age must be within 18-40 years of age.
2. You should have a Savings Bank Account.
3. The subscriber(you) must have a mobile phone.
4. This number you should provide during registration

Features of APY Account

1. This scheme offers you the minimum guaranteed pension of Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs.4, 000 or Rs.5, 000 per month. This pension will start once you attain the age of 60 years. However, this pension amount depends on the contributions made by the subscribers.
2. The subscribers can invest like monthly, quarterly, half-yearly or yearly modes.
3. The penalty on delayed payment has been also has been simplified to Rs.1 per month for a contribution of Rs 100 for each delayed monthly payment instead of different slabs given earlier.
4. Premature withdrawal now is possible with some conditions.
5. The subscriber will get the refund of the contributions made by him to APY, along with the net actual interest earned on his contributions.
6. If the subscriber dies before 60 years of age, then his/her spouse would be given an option to continue contributing to APY account of the subscriber which can be maintained in the spouse’s name, for the renaming vesting period(years), till the original subscriber would have attained the age of 60 years. The spouse of the subscriber shall be entitled to receive the same pension amount as that of the subscriber until the death of the spouse.

How to invest in this APY scheme?

1. Approach your bank branch where you have a savings bank account.
2. Subscriber have to Fill the APY Registration Form.
3. Provide Aadhaar and Mobile Number
4. Make sure you have sufficient balance in saving account for monthly transfer.
5. As your monthly investment in this scheme will be done through an auto-debit facility.

How to withdraw from APY Scheme?

1. When subscriber attains age of 60, then subscriber have to fill the exit form in order to get the pension with 100% annuitisation of the wealth accumulated.
2. In case of death of the subscriber, the pension will continue to the spouse.
3. On the death of both subscriber and spouse, then the pension corpus would be returned to the nominee.
4. Exit before 60 years of age is permitted the only in case of the death of a subscriber or terminal disease.

Settlement in a case of death of the subscriber before attaining the age of 60 years

1. If subscriber died before attaining the 60 years of age, then the below rules will apply.
2. If death occurs before attaining 60 years of age, then his or her spouse will be allowed to continue the account in their name.
3. The account will attain the eligibility for a pension once the age of original (first) subscriber age reaches 60 years of age.
4. After that period, the spouse of the deceased subscriber will be eligible to receive the pension as usual.
5. However, if spouse not interested to continue the account, then the account will be closed and the accumulated corpus will be given to the spouse(wife/husband).
6. If spouse not alive, then the corpus will be payable to the nominee.

Atal Pension Yojana monthly contribution for indicative pension.

Approx Corpus		Rs 1.70 Lakhs	Rs 3.40 Lakhs	Rs 5.10 Lakhs	Rs 6.80 Lakhs	Rs 8.50 Lakhs
Age of Joining	Years of Contribution	Indicative pension of Rs 1000	Indicative pension of Rs 2000	Indicative pension of Rs 3000	Indicative pension of Rs 4000	Indicative pension of Rs 5000
19	41	46	92	138	183	228
26	34	82	164	246	327	409
31	29	126	252	379	504	630
36	24	198	396	594	792	990
40	20	291	582	873	1164	1454

Full chart can be accessed at https://www.npscra.nsdl.co.in/scheme-details.php

As you can observe from the table, early you start, the more beneficial it is.

For example, a 19 year old invests in APY for 41 years Rs 228.00 per month, then his total contribution is at 60 yrs Rs 112176. If he/she or spouse lives till 80 years, then total pension received is Rs 12.00 Lakhs apart from Rs 8.50 Lakhs for nominee after subscriber and spouse death.

Also, a 40 year old invests in APY for 20 years Rs 1454.00 per month, then his total contribution is at 60 yrs Rs 348960.

PRAN, Transaction Statements and Contribution Under APY

1. Transaction statement and PRAN Card can be viewed and printed anytime, from anywhere and free of cost by visiting www.npscra.nsdl.co.in>> Home>>Atal pension Yojana>> APY e-PRAN/Transaction statement view.

• Subscriber can request for issuance of Physical PRAN card after paying the requisite sum at the website https://enps.nsdl.com/eNPS/APYRePrintPRAN.html>>Atal Pension Yojana>>Print APY PRAN Card,

• After enrolling into Atal Pension Yojana, Physical transaction statement will be sent once in a year to the registered address i.e. the address provided by a subscriber after enrolling for Atal Pension Yojana.

• All the queries regarding APY account / contribution should be made to the APY-SP branch only or through CGMS.

• Information about the status of contributions will be communicated by CRA-NSDL through periodic SMS alerts on registered mobile number of the subscriber

Modification of Subscriber Details under APY

1. Subscriber will have to fill the desired changes in APY Subscriber modification form and submit the same to the APY-SP branch along with the required documents for modification of personal information like address, phone number, etc. The form can be downloaded online from https://www.npscra.nsdl.co.in/nsdl-forms.php

• Change in frequency of contribution e.g. from quarterly contribution to monthly contribution or from half yearly contribution to quarterly contribution etc. may be done after submission of written request by the APY subscriber to the APY-SP branch. Upgrade/ Downgrade of Pension Amount

• APY subscribers can upgrade/downgrade their pension amount once in a financial year.

• The feature enables the user to check the differential amount to be deposited/ to be received back as per the new guaranteed pension amount chosen.

• Higher amount needs to be deposited in case of upgrade and additional contributions would be returned to the subscribers in case of down grade.

• Switching facility is available anytime once in a year for which “APY Subscriber Modification Form” available at https://www.npscra.nsdl.co.in/ >>Home>>Atal Pension Yojana>>Forms>>Subscriber Maintenance>> Subscriber Modification Form, is to be submitted to APY-SP branch. To upgrade the pension amount means to increase the pension amount of a subscriber and to downgrade the pension amount means to decrease the pension amount of a subscriber.

FINAL VERDICT

The government is considering a proposal to raise the pension limit under Atal Pension Yojana (APY) to up to ₹10,000 per month from the existing slab of up to ₹5,000.00.

As it is a Government guaranteed scheme, so the tension of purchasing annuity schemes for pension and studying interest rates for pension annuity is not required.

If both husband and wife purchase APY scheme, then the pension amount may be descent enough to survive retired life for a middle class family. Even after death of one, other will continue to receive both pensions. Nominee will receive corpus of both pensions.

APY enjoys the same tax benefits as NPS or National Pension System, which means a contributions paid in APY can be claimed for income tax deduction up to Rs. 50,000 under Section 80CCD (1B) of the Income Tax Act, over and above the Rs. 1.5 lakh allowed under Section 80C.

If you have not taken APY yet, please go and take one from your Bank. Rush…but submit the application in legible handwriting and submit spouse name and nominee name correctly.

If any query related to APY, please comment below. I will be happy to help…..