Atal Pension Yojana (APY) is a government-backed pension scheme for workers from the unorganised sector, such as daily wage earners, domestic help, etc. It offers four pension slabs: Rs 1,000, Rs 2,000, Rs 4,000, and Rs 5,000, depending on the monthly contributions. The government contributes 50 per cent of a member’s annual payments, or Rs 1,000, whichever is less, and provides tax benefits for contributions under Section 80CCD (1) of the Income Tax Act, 1961. The pension age is 60. However, it allows early exit in certain circumstances.

Here are some exit rules for Atal Pension Yojana (APY): 

Exit Due To Death 

The Atal Pension Yojana outlines the exit rules, specifying the lock-in period, the penalty for early withdrawal, eligibility, etc. If exited prematurely, one may forfeit the interest payment. Adhering to these rules is crucial to maximise returns or avoid losses. 

The Pension Fund Regulatory Development Authority (PFRDA), which manages the APY fund, will return the corpus to the spouse or the beneficiary if they decide to close the account. However, if the subscriber is unmarried, divorced, legally separated, or the spouse passes away, the nominee will receive the fund.

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Maintenance of APY account:

During the vesting period, the spouse may continue contributing to the APY account. However, the account will be in the spouse’s name. Furthermore, the spouse is eligible to receive the same pension amount as the subscriber until death.

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Rules For Premature Exit

Exit due to sickness:

In extraordinary situations, such as serious illness, the subscriber is allowed to close the APY account before the age of 60 or maturity. In that case, the fund manager will transfer the entire corpus fund, including the subscriber and the government’s contributions and profits earned, to the subscriber’s declared bank account.

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Voluntary exit:

If a subscriber decides to leave APY voluntarily before 60, they will receive funds after excluding the government’s contributions and profits after deducting charges for account maintenance, investment management, etc.

In conclusion, APY is one of the popular small savings schemes for retirement, like NPS. APY subscribers have grown considerably in recent years, driven by the growing need for retirement savings, particularly when a large section of the populace is struck by inflationary pressure across different goods and services, and survival post-retirement looks increasingly bleak.