The Atal Pension Yojana is a crucial social security scheme of the Government of India, specifically designed to provide financial security in old age to people working in the unorganized sector. This scheme was launched keeping in mind rising inflation, decreasing earning capacity, and increased life expectancy, ensuring a regular income even after retirement. Under this scheme, the government guarantees a minimum pension, and if the investment returns fall short, the government covers the deficit.
Scheme Launch and Eligibility
This scheme was launched in 2015. Any Indian citizen between the ages of 18 and 40 can apply. A bank or post office savings account is mandatory, and contributions are usually deducted directly from the account. The scheme aims to provide pension security to small investors and people in the unorganized sector.
Pension Benefits and Payment System
Upon investing in this scheme, a fixed monthly pension is received after the age of 60. The pension amount ranges from Rs. 1000 to Rs. 5000 per month, depending on the chosen contribution. If the member dies, the spouse continues to receive the same pension, and after the death of both, the nominee receives the accumulated amount.
How Contributions are Determined
The contribution to the Atal Pension Yojana depends on the age and the chosen pension amount. Joining at a younger age requires a lower contribution, while joining at an older age requires a higher contribution. For example, for a Rs. 1000 pension, the monthly contribution is approximately Rs. 42 at a younger age and around Rs. 210 for a Rs. 5000 pension, while these amounts increase significantly at the age of 40.
Tax Benefits and Investment Advantages
Investing in this scheme can provide tax benefits under Section 80CCD of the Income Tax Act. Under the old tax regime, a deduction is available on the investment amount up to a prescribed limit. In some cases, additional tax deductions are also provided.
Rules for Exiting the Plan and in Case of Death
Exiting the plan before age 60 is generally not possible, but withdrawal may be permitted under certain exceptional circumstances. If the member dies before age 60, the spouse can continue the contributions or withdraw the accumulated amount.