Business Desk – Atal Pension Yojana: Everyone wants to have a source of regular income in old age, so that they do not have to depend on anyone else for small and big needs. But due to low income or limited savings, it is not easy for every person to prepare a big pension fund.
For such people, the government's Atal Pension Yojana (APY) is an option, in which there is a provision of a minimum monthly pension of Rs 1,000 to Rs 5,000 after the age of 60 by making regular contributions from an early age. How much you have to contribute to this scheme depends on your age and the pension amount chosen. The special thing is that the younger you join APY, the less will be the monthly contribution.
Starting from Rs 210 per month at the age of 18
If a person opts for monthly pension of Rs 5,000 in Atal Pension Yojana at the age of 18 years, then he will have to contribute Rs 210 every month. In this way he will have to contribute till the age of 60 years i.e. for 42 years.
With increasing age, the monthly contribution for this pension of Rs 5,000 also increases. At the age of 20 years, Rs 248 has to be deposited, Rs 376 in 25 years, Rs 577 in 30 years and Rs 902 in 35 years. At the age of 40, for a monthly pension of Rs 5,000, a monthly contribution of Rs 1,454 has to be made. That is, the direct advantage of starting early in APY is that due to contribution for a longer period, less amount has to be deposited every month.
Who can take benefit of Atal Pension Yojana?
Indian citizens between the age of 18 to 40 years can join Atal Pension Yojana. For this it is necessary to have a savings account in a bank or post office. However, after October 1, 2022, existing or former income taxpayers cannot open a new APY account.
In this scheme a person can open only one account. Contribution has to be made in the scheme according to the pension chosen and this contribution continues till the age of 60 years. APY account can be opened through bank or post office.
Pension option from Rs 1,000 to Rs 5,000
In Atal Pension Yojana, after the age of 60 years, minimum monthly pension option of Rs 1,000, 2,000, 3,000, 4,000 and 5,000 is available. Your contribution will be decided according to the pension you choose and the age at which you join the scheme. Therefore, starting planning at an early age can be more financially beneficial.
How much to contribute for pension of Rs 5,000 from 18 years?
For a monthly pension of Rs 5,000, one has to deposit Rs 210 every month after starting APY at the age of 18 years. The same contribution becomes Rs 248 per month in 20 years, Rs 376 in 25 years, Rs 577 in 30 years, Rs 902 in 35 years and Rs 1,454 per month in 40 years.
If Rs 210 is deposited per month from the age of 18, then one will have to contribute for 42 years. In this way the total contribution comes to around Rs 1.06 lakh. After the age of 60 years, a minimum guaranteed monthly pension of Rs 5,000 is available.
What happens after the death of a pensioner?
In Atal Pension Yojana, if the pensioner dies after the age of 60, his spouse continues to get the same monthly pension. That is, if the pensioner was getting Rs 5,000 per month, then after his death the spouse will also continue to get Rs 5,000 monthly pension. After the death of both husband and wife, the pension wealth deposited under the scheme is given to the nominee.
What are the options in case of death before 60 years?
If a subscriber dies before the age of 60 years, his/her spouse has the option to continue the APY account. The spouse can continue to contribute and operate the account till the subscriber attains the age of 60 years and thereafter can avail pension benefits.
Rs 8.5 lakh to the nominee along with Rs 5,000 pension.
Let us understand this with an example. If a person opted for a monthly pension of Rs 5,000 and he died after the age of 60, his spouse would continue to receive a pension of Rs 5,000 per month.
After this, on the death of both husband and wife, the nominee gets a fixed pension wealth of Rs 8.5 lakh in lump sum. This amount is not just the pensioner's accumulated contributions, but is the pre-determined pension wealth for the pension option of Rs 5,000.
That is, a subscriber who has deposited a total contribution of about Rs 1.06 lakh by depositing Rs 210 per month from the age of 18 years can also get the provision of fixed pension wealth of Rs 8.5 lakh for the nominee under the rules of the scheme.
You can make payment not only every month but also in three or six months.
Contribution to APY is deposited through Auto-Debit from bank or post office account. The subscriber can choose to contribute every month, three months or six months as per his convenience.
However, it is not necessary to consider Atal Pension Yojana as the sole solution to all your retirement needs. Whether the monthly pension of Rs 5,000 will be sufficient to keep pace with future inflation or not is a different question. Therefore, considering your income and future needs, it may be wise to consider other savings and investment options along with APY.
