Everything you need to know about Atal Pension Yojana (APY): A comprehensive guide to secure your retirement

Atal Pension Yojana

Retirement—-that stage of life when one stops earning a monthly salary—is a big worry for those who are employed in the private sector as they do not get a pension. However, those who work in the organized sector are slightly better off as they are covered by the government-run Employees’ Provident Fund Scheme and they can also enroll in the National Pension Scheme (NPS) if they wish to. This blog post will discuss a specific plan—the Atal Pension Yojana (APY), an extension of the National Pension Scheme. This government-backed scheme in India primarily caters to workers in the unorganized sector who lack access to formal pension schemes.

What is Atal Pension Yojana?

Atal Pension Yojana (APY) is a government-run pension scheme in India. The scheme, named after former Prime Minister Atal Bihari Vajpayee, is designed to provide financial security to workers in the unorganized sector during their retirement years.

APY, launched on 9 May 2015, is managed by the Pension Fund Regulatory and Development Authority (PFRDA) under the Ministry of Finance, Government of India. PFRDA oversees the administration of the scheme, ensuring compliance with guidelines and safeguarding the interests of subscribers. The contributions made are invested by professional fund managers to generate returns, which constitute the pension amount paid out during the retirement phase.

Eligibility and benefits of APY

Any Indian citizen can enroll in the APY scheme if they meet the eligibility criteria, which include:

1. Age limit: APY is open to individuals in the age group of 18-40. 

2. Bank account: Potential APY subscribers are required to have a savings bank account as the scheme runs on contributions made via an auto-debit facility from the subscriber’s savings account. 

3. Excludes tax-payers: From 1 October 2022, any citizen who is or has been an income-tax payer, is not eligible to join APY.

Benefits of APY

Every pension scheme comes with specific benefits to help subscribers meet their financial goals. Let’s take a look at the benefits provided by the Atal Pension Yojana:

  1. The scheme offers fixed pension amounts ranging from Rs. 1,000 to Rs. 5,000 per month, depending on the contribution and the age of enrollment.
  2. In the unfortunate event of the subscriber’s death, the spouse is entitled to receive the pension benefits. If the spouse passes away, the pension accrued will be handed over to the nominees.
  3. Contributions made to APY are eligible for tax benefits like those offered by the National Pension System (NPS).

Contribution and Co-contribution

The Atal Pension Yojana (APY) involves varying contribution levels, depending on the age at which an individual joins the scheme and the selected pension amount. Naturally, younger individuals contribute lower amounts compared to those joining at a later age. The chosen pension amount also influences the contribution, with higher pension goals requiring higher contributions. Here’s an indicative APY contribution chart for your easy reference. 

Age of EntryYears of  ContributionMonthly pension of Rs. 1,000 and Indicative return of corpus to the nominee of Rs1.7 Lakh.Monthly pension of Rs. 2,000 and indicative return of corpus to the nominee of Rs.3.4 Lakh.Monthly pension of Rs. 3,000 and indicative return of corpus to the nominee of Rs.5.1 Lakh.Monthly pension of Rs. 4,000 and indicative return of corpus to the nominee of Rs.6.8 Lakh.Monthly pension of Rs. 5,000 and indicative return of corpus to the nominee of Rs.8.5 Lakh.
Data Source: Paisabazaar

Co-contribution by the government of India

For subscribers who joined APY between 2015 and 2020, the Government of India provided a co-contribution for a period of five years, from financial year 2015-16 to 2019-20. So, in addition to the individual’s contributions, the government contributes a specified amount to the subscriber’s pension account. The central government’s contribution, up to Rs. 1,000 per annum was made available for those subscribers who joined APY before December 31, 2015. This co-contribution was meant to encourage individuals to enroll in the scheme during its initial years.

Enrollment process for APY

The Atal Pension Yojana (APY) is open to Indian citizens who are in the age group of 18 to 40 years. Another mandatory requirement is to hold a bank account in their name. Individuals can enroll for APY by following the steps below: 

  1. Go to a nationalized bank or any authorized bank’s branch. APY pension scheme is easily accessible as it is offered through various banks.
  2. Fill out the APY registration form at the bank and provide necessary details like name, DoB, phone number, and Aadhaar details. 
  3. Complete the mandatory requirement of linking your Aadhaar to the APY application and ensure that your savings bank account is linked to the APY account.
  4. Choose the pension amount you wish to receive during your retirement and the frequency of your contributions. You can choose monthly, quarterly, or yearly deductions.
  5. Sign the consent form for auto-debit. This allows the bank to automatically deduct your chosen contribution amount from your linked savings account.
  6. If the enrollment process is complete in all respects, you will receive a confirmation receipt from the bank, acknowledging your enrollment in the Atal Pension Yojana.

While APY was launched primarily for the unorganized sector, it is open to all individuals, including private-sector employees and self-employed individuals who do not have access to formal pension benefits. 

The importance of APY in retirement planning

Pension schemes are a vital part of the country’s financial system. The importance of having a steady monthly income during retirement years cannot be overstated. A monthly pension also enables retirees to live a dignified, comfortable life. Let’s try to understand why having a pension plan is a necessity: 

1. Increasing life spans: Advanced health care has increased life expectancy. While this is a good thing, it has led to longer retirement years. Pension schemes like APY address the need for financial support during sunset years.

2. Decreasing income in old age: Retirement from a job marks the end of regular employment and a monthly salary. While individuals can always lean back on their savings, it may not be sufficient for long years. Pension schemes like APY follow a systematic approach, ensuring a regular income source during retirement years.

3. Rising cost of living: The cost of living continues to escalate due to inflation and other economic factors. This poses a challenge to non-pensionable employees after their retirement. Pension schemes act as a financial cushion for retirees to meet their basic needs and health care expenses.

Operational framework and funding of APY

Put simply, APY is a government-backed pension scheme that focuses on encouraging voluntary savings. Here’s how it functions:

  1. Voluntary enrollment: Individuals voluntarily enroll in the APY scheme which emphasizes inclusivity for those in the unorganized sector. 
  2. Age criteria: The scheme is open to individuals aged 18 to 40.
  3. Fixed pension amounts: Subscribers choose their pension amount and contribute to the pension fund accordingly.
  4. Guaranteed pension: Upon reaching 60 years of age, subscribers receive a guaranteed pension amount.

Funding of APY 

APY’s funding is derived from the contributions made by subscribers. In the initial five years following the launch of the scheme, the central government made a co-contribution of up to Rs. 1,000 a year for eligible subscribers.

Replacement of Swavalamban Yojana/NPS Lite Scheme by APY

The Atal Pension Yojana scheme replaced the Swavalamban Yojana in 2015. The replacement of the Swavalamban Yojana/NPS Lite scheme by APY is a significant development in enhancing pension accessibility.  Here’s how APY replaced the Swavalamban Yojana/NPS Lite scheme:

  1. APY brought improvements, including fixed pension amounts and increased flexibility, making it more attractive and accessible to employees. 
  2. Unlike the Swavalamban Yojana/NPS Lite Scheme, APY offered subscribers the option to choose the pension amount based on their financial situation and retirement needs. 


APY plays an important role in fostering financial independence during retirement years. This scheme encourages individuals to contribute regularly and plan for their future. The pension scheme’s structured approach and affordability make it an inclusive retirement planning option for individuals working in the unorganized sector. Moreover, the eligibility criteria for APY are very basic compared to other pension schemes.

If you or people close to you are not registered in any pension plan, consider enrolling in Atal Pension Yojana for a financially secure and stable retirement life.


Q. What is Atal Pension Yojana (APY)?

A. Atal Pension Yojana is a government-sponsored pension scheme in India, launched by the Government of India in 2015. It aims to provide a fixed monthly pension to citizens in their retirement years, especially those in the unorganized sector who may not have access to formal pension schemes.

Q. Who is eligible to enroll for APY?

A. Any Indian citizen between the ages of 18 and 40, who is not an income-tax payer, can join the Atal Pension Yojana. The individual should have a valid Aadhaar card and a bank account.

Q. What are the benefits of APY?

A. APY provides a fixed monthly pension to its subscribers during their retirement years. The pension amount varies based on the contribution amount and the age at which the individual joins the scheme.

Q. How is the pension amount determined under APY?

A. The pension amount is determined based on the age of entry into the scheme and the chosen contribution amount. The earlier one joins the scheme and the higher the contribution, the higher the pension amount.

Q. Can a subscriber change the contribution amount later?

A. Yes, subscribers are allowed to change their contribution amount once a year in April. The amount can be increased or decreased as needed.

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