Atal Pension Yojana: Rs 1,164 a month from age 40 can fetch Rs 4,000 pension after 60

Private-sector employees and daily wage earners worry most about what happens after retirement. Government employees get a pension, but those working in private companies and on daily wages have no support in old age. Income stops, but expenses do not. The Centre has launched the Atal Pension Yojana for such people.

One can start contributing to the scheme even at the age of 40. By paying just Rs 1,164 a month, a subscriber receives Rs 4,000 every month for life after the age of 60. The scheme offers pension options from Rs 1,000 to Rs 5,000 a month.

According to information provided by the PFRDA (Pension Fund Regulatory Authority), the scheme is completely safe. The subscriber has to decide in advance how much pension is wanted in old age. The higher the pension sought, the higher the monthly contribution.

If a person joins the scheme at 40, he has to contribute for 20 years, from age 40 to 60. For a pension of Rs 4,000, the monthly contribution is Rs 1,164. This works out to Rs 13,968 a year, and Rs 2,79,360 over 20 years. As soon as the subscriber turns 60, a pension of Rs 4,000 a month starts, or Rs 48,000 a year. This will continue for life.

The full calculation at a glance: the age of joining is 40 years. Contributions are to be paid for 20 years. The monthly contribution is Rs 1,164 and the annual contribution is Rs 13,968. The total paid over 20 years is Rs 2,79,360. After 60, the monthly pension is Rs 4,000 and the annual pension is Rs 48,000. The fund payable to the nominee is Rs 6.8 lakh.

The pension is not only for the subscriber. It begins when the subscriber turns 60. If something happens to the subscriber, the spouse continues to receive the same pension. This keeps old age secure for both.

Many people think they will receive Rs 6.8 lakh in hand at 60, but that is not so. The Rs 6.8 lakh fund is given to the nominee, that is, the children, only after both the account holder and the spouse have died. The order is: first the pension to the subscriber, then the pension to the spouse, and finally the money to the children.

There are only three conditions for joining the scheme. The applicant must be an Indian citizen, must be between 18 and 40 years of age, and must hold an account with a bank or a post office.

Opening an account is easy. One has to go to the nearest bank or post office and ask for the Atal Pension Yojana form. The form requires personal details, bank account details and the nominee's name. Once the form is submitted, the monthly contribution is deducted automatically from the account, and there is no need to visit repeatedly. The process can now also be completed online.

Those who want a comfortable old age must prepare now. Setting aside a small amount every month builds a sizeable pension. For those around 40, this is the last chance to join.