What is Atal Pension Yojana

The Atal Pension Yojana (APY) is a pension scheme launched by the Government of India in 2015. It is aimed at providing pension benefits to the unorganized sector workers who do not have any formal pension scheme. This scheme was launched by the Government of India with an objective to provide financial security to the unorganized sector workers during their old age.

The Atal Pension Yojana is named after the former Prime Minister of India, Atal Bihari Vajpayee. The scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA), which is the regulatory body for all pension schemes in India.

Features of Atal Pension Yojana:

1. Eligibility: The scheme is available to all citizens of India between the age group of 18 to 40 years who do not have any formal pension scheme. The subscriber must have a savings bank account and Aadhaar card.
2. Pension Amount: The amount of pension is based on the contribution made by the subscriber and the age of the subscriber at the time of joining the scheme. The minimum monthly pension is Rs. 1,000 and the maximum monthly pension is Rs. 5,000.
3. Contribution: The subscriber has to make a regular contribution towards the pension scheme until he or she attains the age of 60 years. The contribution amount depends on the age of the subscriber at the time of joining the scheme and the amount of pension that the subscriber wishes to receive. The contribution amount can range from Rs. 42 to Rs. 1,454 per month.
4. Benefit on Death: In case of the subscriber’s death, the spouse of the subscriber will receive the pension amount. If both the subscriber and the spouse die, the nominee of the subscriber will receive the pension corpus.
5. Benefit on Exit: In case the subscriber decides to exit the scheme before the age of 60 years, the subscriber will receive only the contributions made by him or her along with the interest earned on those contributions. The government’s contribution and the interest earned on that amount will be forfeited.
6. Tax Benefits: The contribution made towards the Atal Pension Yojana is eligible for tax deduction under Section 80C of the Income Tax Act, 1961.

Advantages of Atal Pension Yojana:

1. Low Contribution: The contribution amount is low and affordable for the unorganized sector workers.
2. Pension Security: The scheme provides pension security to the unorganized sector workers during their old age.
3. Government Contribution: The government also contributes towards the pension scheme, which provides an additional benefit to the subscriber.
4. Nominee Benefit: The nominee of the subscriber will receive the pension corpus in case of the subscriber’s death.
5. Tax Benefits: The contribution made towards the Atal Pension Yojana is eligible for tax deduction under Section 80C of the Income Tax Act, 1961.

Disadvantages of Atal Pension Yojana:

1. Limited Pension Amount: The maximum pension amount is limited to Rs. 5,000 per month, which may not be sufficient for some subscribers.
2. No Early Exit: The subscriber cannot exit the scheme before the age of 60 years, except in the case of death or terminal illness.
3. No Return of Contribution: The government’s contribution and the interest earned on that amount will be forfeited in case the subscriber decides to exit the scheme before the age of 60 years.
4. No Inflation Adjustment: The pension amount is not adjusted for inflation, which may lead to a decrease in the real value of the pension over time.

Conclusion:

The Atal Pension Yojana is a welcome initiative by the Government of India to provide pension security to the unorganized sector workers who do not have any formal pension scheme. It is an affordable and accessible scheme that provides financial security during old age. The government contribution towards the scheme provides an additional benefit to the subscriber, and the tax benefits make it an attractive investment option for the middle and lower income groups.

the Atal Pension Yojana is an innovative and much-needed initiative by the Government of India. It provides pension security to the unorganized sector workers and promotes a culture of saving and investment. The scheme has its limitations, but it is still an attractive investment option for the middle and lower income groups. The government should take further steps to promote pension schemes and ensure social security for all citizens of India.