The ongoing COVID-19 pandemic has once again highlighted the importance of investing wisely for a rainy day. Choosing a good pension plan is certainly an imperative.
Atal Pension Yojana (APY), the flagship social security scheme of the government promises to deliver old age income security particularly to the workers in the unorganised sector.
APY provides a minimum guaranteed pension ranging from Rs 1000 to Rs 5000 on attaining 60 years of age. The amount of pension is guaranteed for lifetime to spouse on death of the subscriber. In the event of death of both the subscriber and the spouse, entire pension corpus is paid to the nominee.
APY has pre-defined monthly contributions. Under the APY, the subscribers would receive the fixed pension of Rs. 1000 per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY.
The chart below elaborates on the contribution of subscribers in the various age group.
Depending on the minimum age of joining the APY (at 18 years), a person is required to make a monthly contribution of Rs 210 for getting Rs 5,000 pension per month. Hence, if you can save Rs 7 a day and invest in the scheme, you will be eligible for monthly pension of Rs 5,000.
APY subscribers can enjoy tax benefits on their own contributions as well as their employer’s contribution under Section 80 CCD and 80 CCE.
As per official data, in the last five years, the total enrolment under the APY scheme stood at 2,23,54,028.
During the first two years of its launch, almost 50 lakh subscribers were enrolled which doubled to 100 lakh in the third year and the milestone of 1.50 crore was achieved in the 4th year. In the last financial year, almost 70 lacs subscribers were enrolled under the scheme.