Atal Pension Yojana (APY) is a government-backed retirement pension scheme. It is a risk-free instrument that offers several maturity benefits to subscribers. However, if they leave the scheme prematurely, they will lose some major benefits that come with it.

What Happens If You Close The Account Prematurely

To kick in the maturity benefits, you must wait till maturity or 60 years of age. However, if you leave prematurely, you will lose several maturity benefits. The Atal Pension Yojana permits premature withdrawals, but you will get limited benefits. For instance, it will return your contributions towards the scheme plus any interest accrued on the investment.
Moreover, if you quit the scheme before 65, you will forfeit the government’s contribution and any interest accrued on it. Additionally, you will need to pay a maintenance charge.

Also Read: What Is Aasara Pension? Know The Targeted Beneficiaries And Eligibility

Withdrawal Procedure

To receive pensions, subscribers must submit a withdrawal request to the appropriate bank or post office after the scheme’s maturity. After approval, the subscriber will start receiving a monthly pension until death. If the pensioner dies, the surviving spouse or the nominee will receive it by default. If the subscriber and the spouse pass away, the next legal heir will be entitled to the funds accumulated by the subscriber till the age of 60.

Death Benefits

Option 1: If the subscriber passes away before retirement, the spouse may keep contributing to the subscriber’s APY account, which will be in the spouse’s name for the rest of the term, or choose to receive the pension without further contributions.

Option 2: The subscriber’s spouse or a designated nominee will receive pensions. If the subscriber is single, the designated nominee, a parent, sibling, or friend, will receive the pension.

Also Read: PFRDA Issues Master Circular For Online Registration Of Atal Pension Yojana

Atal Pension Yojana can be a good choice for single and married individuals. If the nominee and the spouse want, they can change the account in their name. If the subscriber is a single parent, his/her kids will inherit the funds.