Atal Pension Yojana: How to close APY account?

APY Account Closure: Among the various investment options for saving towards retirement, the Atal Pension Yojana (APY) is a government-backed scheme that provides a fixed pension. Between the age of 18 and 40 years, APY is available for anyone with a savings account in a bank or post office. One can open an APY account in SBI, HDFC, ICICI, Axis or any other bank. The amount of pension depends on the age and the amount of contribution that one chooses to make into the scheme. The monthly pension limit in APY is Rs 1,000 to a maximum of Rs 5,000 which starts from age 60 of the subscriber. However, if you want to close the APY account before maturity, you can do so. For the APY account closure, one needs to apply in the prescribed form with the bank where the savings account is held. The voluntary exit from APY can be done anytime before the age of 60 and the refund will come to one’s savings account.

APY closure application

Earlier, the early exit in APY was allowed only in case of terminal illness or death of the subscriber. Subsequently, voluntary exit from APY was also allowed. In the Account Closure Form, one needs to give the PRAN number, savings account number and the reason for voluntary withdrawal which could be –

i) Not able to pay future contributions,

ii) Require funds urgently

iii) Any other reason. The bank will have to provide an acknowledgement to the subscriber.

APY refund process

However, there could be certain deductions from the APY balance. The amount of government co-contribution and the income earned on it will not be returned, while the subscriber’s own contribution along with with net actual income earned after deducting account maintenance, asset management fee etc will be returned. In case the APY account is being closed due to terminal illness or death of the subscriber, nothing is deducted and both subscriber’s and government’s contribution (if any) along with income is returned. Contributions to APY can be made from a bank savings account and the withdrawal proceeds can also go into the same bank account.

Instead of closing APY, if hard-pressed for funds, it’s better to delay contributions. Stopping APY contributions will not deactivate the account and later on, one can regularize APY account by paying a penalty of Rs 1 per month for the contribution of every Rs 100. APY has a limited pension amount, which could be inadequate, hence one should have adequate savings directed towards one’s retirement.