The full form of APY in banking is Atal Pension Yojana. It is a government-backed pension scheme launched to provide a steady income to individuals after the age of 60. APY is especially designed for workers in the unorganized sector who do not have access to formal pension benefits.
What Is Atal Pension Yojana (APY)?
Atal Pension Yojana was introduced by the Government of India in 2015. It aims to give financial security to citizens during their old age. The scheme allows eligible individuals to contribute a fixed amount every month and receive a guaranteed pension ranging from ₹1,000 to ₹5,000 per month after retirement.
APY is managed by the Pension Fund Regulatory and Development Authority (PFRDA) and can be easily opened through banks, post offices, and digital channels like net banking.
Key Features of APY
1. Guaranteed Pension
Subscribers receive a fixed pension after the age of 60, based on their contribution amount and age of joining. Pension options include ₹1,000, ₹2,000, ₹3,000, ₹4,000, and ₹5,000 per month.
2. Government Contribution
For eligible subscribers who joined between 2015–2016, the government contributed 50% of the total contribution or ₹1,000 annually, whichever was lower.
3. Auto-Debit Facility
The monthly contribution is automatically deducted from the subscriber’s bank account, ensuring timely payment.
4. Spouse Benefits
In case of the subscriber’s death, the spouse can either continue the scheme or claim the pension amount.
5. Tax Benefit
APY deposits qualify for deduction under Section 80CCD(1B), offering additional tax savings.
Eligibility for APY
- Age must be between 18 to 40 years
- A savings bank account is required
- Aadhaar and mobile number are recommended for smooth operations
Why APY Is Important?
APY encourages long-term financial planning for individuals who work in unorganized sectors such as labourers, daily wage workers, small shopkeepers, farmers, and more. It ensures they have a regular income after retirement, reducing financial stress in old age.