Atal Pension Yojana Contribution, Penalty and Exit Rules Simplified
Atal Pension Yojana is a guaranteed pension scheme which was launched on 9th May, 2015 in Kolkata by Shri Narendra Modi with an aim to provide the social security for post-retirement life of the people employed in unorganized sectors.
The scheme assures a guaranteed pension of Rs.1000 per month or Rs. 2000 per month or Rs. 3000 per month or Rs. 4000 per month or Rs. 5000 per month after retirement. The scheme is available for the age group of 18-40 years.
Since the launch, APY is being criticized for some of its terms and conditions such as low pension, penalty and withdrawal rules. Thus to improve the scheme, few changes and relaxation have been made to increase the acceptance of the scheme amongst informal sector workers.
The modifications carried out in Atal Pension Yojana are as under:
Frequency of Contribution
Subscribers have been given an option to make the contribution on a monthly, quarterly or half yearly basis. The subscriber can choose the frequency for one year i.e. in the first year contribution could be made on monthly basis and for second year on quarterly basis or so.
Earlier, there was only one option for the contribution frequency i.e. Monthly contribution which is now relaxed.
Default in Paying Contributions
In the event of failure of paying contribution, the account will not be deactivated and closed till the account balance remains positive after deducting the Government contributions and applicable maintenance charges & fees. In simple words, if account balance less government contributions less maintenance charges goes NIL or negative than only account will be deactivated and closed.
Earlier, continuous non-payment of contributions for 24 months would have triggered the deactivation and closure of the account.
Penalty on Delayed Contribution
In line with relaxation of closure of account, penalty for not paying contributions on time is also trimmed. As per new rules penalty on delayed payment would be Rs.1/- per month for Rs.100, or part thereof, for each month till the contributions together with penalty is paid. For example contribution of Rs.689/- per month is not paid for 5 months than in the sixth month he is required to pay Rs.413/- i.e. Rs.689/- X 6 months + Rs.1/- X 5 months.
Earlier, there was a slab of penalty based on the amount of monthly contribution.
Exit from Scheme
The major relaxation has been given in the Premature Exit Rules of Atal Pension Yojana. Earlier, subscriber was not allowed to exit scheme before sixty years except in exceptional circumstances, i.e., in the event of the death of the beneficiary or terminal disease.
But after modifications, subscriber is now permitted to voluntarily exit from the scheme with the condition that Refundable amount shall be the account balance after deducting maintenance charges & fees and Government Contributions & interest on Government Contributions.
In simple words, refund amount would only be the subscribers contributions and interest earned on his contributions after deducting maintenance charges & fees.