Atal Pension Yojana ( APY).

Atal Pension Yojana (APY) is a guaranteed pension scheme by the Government of India and is administered by the Pension Fund Regulatory and Development Authority (PFRDA).Minimum monthly pension is Rs.1000/- and Maximum Rs.5000/-,which you would get on attaining your 60th age,provided you do not default in your monthly contribution.Minimum age for joining the scheme is 18 and maximum age is 40.The scheme will run till your 60th age after which you can either withdraw the whole amount or get pension @ 7 %.And as far as I understand this rate is fixed,irrespective of the  inflation rate.The scheme is run through banks.There would be a switching option once in a year to increase or decrease the monthly contribution.

If you start at your 18th age,your monthly contribution for a Rs.1000/- pension would be Rs.42 and for Rs.5000/-,Rs.210/-,for 42 years (ie 42*12 =.504 months) Likewise if you start at bottom line of 40 years, you have to contribute for 20 years continuously Rs.291 and Rs.1454 for a monthly pension of  Rs.1000/- and Rs.5000/- respectively.Government will contribute of  50% of the subscriber’s contribution or Rs. 1,000 per annum,(whichever is lower)for 5 years for those who joins the scheme between June 1 to December 31, 2015. But this benefit is not available for anyone who is covered by Government's social security scheme (eg:EPF) and income tax payers.

An Illustrative Chart

Other features

1. There would be a levy of penalty for delay in monthly contibution.But the penalty'll become part of the pension corpus of the subscriber.

• Re. 1/- p.m.    for contribution up to Rs. 100 p.m.
• Rs. 2/- p.m.    for contribution up to Rs. 101-500 p.m. 
• Rs. 5/- p.m.    for contribution between Rs. 501-1,000 p.m.
• Rs. 10 /- p.m. for contribution beyond Rs. 1,001+ p.m. 

2. Discontinuations would be treated as follows

• Exit from the scheme before 60 years of age is not allowed except in case of death and terminal illness and Government contribution and interest on it won't be paid back on such exit.
• On death of beneficiary before maturity of scheme,beneficiary's spouse and where both beneficiary and spouse dies,the nominee can claim the corpus.
• After 6 months - Account will be frozen.
• After 12 months - Account will be deactivated.
• After 24 months - Account will be closed.
• There would be an account opening charge and an account maintenance charge of Rs.15/- and Rs.40/- per account per annum on closure of units.
• There would also be an investment management fee of .0102% per annum of AUM and investment maintenance fee of 0.0075% for electronic and 0.05% for physical segment per annum per AUM both of which would be adjusted in Net Asset Value.

On an Analysis

1. More beneficial to those at the lower side of age group.(As in any pension schemes)
2. It is not clearly stated what would happen to the corpus collected till a default.
3. Not the best of the schemes,you can get better rates in Banks' (Indian) Recurring Deposit (RD) accounts,PPF (Public Provident Fund) accounts and Post Office RD accounts.
4. Banks' and PO RD acccounts has further an advantage where you can decide the term and you wont have to keep continuously contributing for so many years,
5. If you keep your  monthly contribution as to make your yearly contribution slightly above Rs.1000/- per year (eg: Rs.84 for an 18 year old) you can get a government contribution almost equal to your contribution for 5 years and earn interest for it till maturity.
6. Spouse is not clearly defined,though there is meaning attributed in common parlance,such issues might crop up in divorce,waiting for divorce and cases where beneficiary would like to mention someone else as nominee in form or by virtue of a will.
7. Switching option once in a year to either increase or decrease the monthly contribution is a good feature of the scheme.