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Atal Pension Yojana is a pension scheme introduced by the Government of India in 2015–16. It was implemented with an objective to provide pension benefits to individuals in the unorganized sector. This scheme is regulated and controlled by the Pension Funds Regulatory Authority of India (PFRDA).

It is an extension of the recognized National Pension Scheme(NPS) and replaces the previously institutionalised Swavalamban Pension Yojana which was poorly received by the general population. All accounts that were opened in the first year of the scheme, i.e. in 2015, were eligible for co-contributions from the Indian government for 5 years.

What is Atal Pension Yojana?

Atal Pension Yojana is a Social Security Scheme initiated by the Government of India and is aimed at providing a steady stream of income after the age of 60 to all citizens of India. In other words, it is a pension scheme focused mainly on the people employed in the unorganized sector such as maids, delivery boys, gardeners, etc. 

The primary goal of the scheme is to make sure that no Indian citizen has to worry about sudden illness, accidents or chronic diseases in their old age, giving a sense of security. Not only confined to only unorganized sector, private sector employees or those who are working with an organization that does not provide them pension benefit can also apply for the scheme. 

What is the Objective of the APY Scheme?

This pension scheme is targeted to mitigate the basic financial obligations of individuals that crop up in their retirement phase by encouraging savings from an early age. The amount of pension which an individual shall receive is directly dependent on the monthly contributions they decide to make and their age.

Beneficiaries of Atal Pension Yojana (APY) shall receive their accumulated corpus in the form of monthly payments. In the event of a beneficiary’s death, his/her spouse shall continue to receive pension benefits; and in case both such individuals are deceased, the beneficiary’s nominee shall receive the amount in a lump sum.

Key Features of Atal Pension Yojana 

The features of APY scheme are discussed below – 

  • Automatic debit

One of the primary conveniences of the Atal Pension Yojana is the facility of automatic debit. The bank account of a beneficiary is linked with his/her pension accounts and the monthly contributions are directly debited. On that account, individuals who have subscribed to this scheme shall ensure that their account has sufficient finances to entertain such automatic debit, failing which shall attract a penalty.

  • Facility to increase contributions

As mentioned earlier, the pension amount one is eligible to receive upon reaching the age of 60 is determined by their contributions. There are different contributions which tantamount to different pension amounts. 

And, it might be so that individuals decide to make larger contributions to their pension account backed by an increased financial capacity to secure a higher pension amount later in the course of the scheme. To facilitate this requirement, the government provides an opportunity to increase and even decrease one’s contributions once a year to change the corpus amount.

  • Guaranteed pension

Beneficiaries of the scheme can choose to receive a periodic pension of Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000, or Rs. 5000, depending on their monthly contributions.

  • Age restrictions

Individuals who are above 18 years and below 40 years of age can decide to invest in the Atal Pension Yojana. Therefore, college students can also invest in this scheme to create a corpus for their old age. 40 years has been set as the maximum bar for entry into the programme, as contributions to this scheme shall be made for at least 20 years.

  • Withdrawal policies

If a beneficiary has attained the age of 60, he/she shall be eligible to annuitise the entire corpus amount, i.e. receive monthly pensions after closing the scheme with the respective bank.

One can only exit this scheme before reaching the age of 60 under circumstances like terminal illness or death.

In the case of a beneficiary’s death, before he/she reaches 60 years of age, his/her spouse shall be entitled to receive a pension. As such, the spouse has an option to either exit the scheme with the corpus or continue to receive pension benefits.

However, if individuals choose to exit the scheme before they reach 60 years of age, they shall only be refunded their cumulative contributions and interest earned thereon.

  • Terms of penalty

If beneficiary delays in the payment of contributions, the following penalty charges are applicable –

  • Re. 1 for monthly contributions of up to Rs. 100.
  • Rs. 2 for monthly contributions within Rs. 101 and Rs. 500.
  • Rs.5 for monthly contributions within Rs. 501 and Rs. 1000.
  • Rs.10 for monthly contributions of Rs. 1001 and above.

In the case of continued default in payment for 6 consecutive months, such account shall be frozen and if such default continues for 12 consecutive months, that account shall be deactivated and the amount thus accumulated along with interest would be returned to the respective individual.

  • Tax exemptions

Tax exemption is available on contributions made by individuals towards Atal Pension Yojana under Section 80CCD of the Income Tax Act, 1961. Under Section 80CCD (1), the maximum exemption allowed is 10% of the concerned individual’s gross total income up to a limit of Rs. 1,50,000. An additional exemption of Rs. 50,000 for contributions to the Atal Pension Yojana Scheme is allowed under the Section 80CCD (1B).

Regardless, it is advisable to consult a professional for these exemptions as such tax benefits can be availed based on specific provisions stated in the Income Tax Act.

What is the Monthly Contribution for Atal Pension Yojana?

Monthly contributions depend on the preferred final corpus amount and desired monthly pension along with the concerned individual’s age of entry into the scheme. The list of monthly contributions for Atal Pension Yojana is enumerated in the table below.

Monthly Contributions for (In Rs.)
Entry Age

(In Years)

Number of Years of Contribution Monthly Pension – Rs. 1000 | Indicative Return of Corpus – Rs. 1.7 Lakh Monthly Pension – Rs. 2000 | Indicative Return of Corpus – Rs. 3.4 Lakh Monthly Pension – Rs. 3000 | Indicative Return of Corpus – Rs. 5.1 Lakh Monthly Pension – Rs. 4000 | Indicative Return of Corpus – Rs. 6.8 Lakh Monthly Pension – Rs. 5000 | Indicative Return of Corpus – Rs. 8.5 Lakh
18 42 42 84 126 167 210
19 41 46 92 138 183 228
20 40 50 100 150 198 248
21 39 54 108 162 215 269
22 38 59 117 177 234 292
23 37 64 127 192 254 318
24 36 70 139 208 277 346
25 35 76 151 226 301 376
26 34 82 164 246 327 409
27 33 90 178 268 356 446
28 32 97 194 292 388 485
29 31 106 212 318 423 529
30 30 116 231 347 462 577
31 29 126 252 379 504 630
32 28 138 276 414 551 689
33 27 151 302 453 602 752
34 26 165 330 495 659 824
35 25 181 362 543 722 902
36 24 198 396 594 792 990
37 23 218 436 654 870 1087
38 22 240 480 720 957 1196
39 21 264 528 792 1054 1318

Atal Pension Yojana Benefits

Some of the major advantages of the scheme are enumerated below – 

  • Source of income in old age

Individuals are provided with a steady source of income after they reach 60 years, thus financially enabling them to meet basic requirements such as medications, which is fairly common in old age.

  • Government-backed pension scheme

This pension scheme is backed by the Indian government and regulated by Pension Funds Regulatory Authority of India (PFRDA). Hence, individuals carry no risk of loss as the government assures their pension.

  • Enabling the unorganized sector

The scheme was launched primarily with the motive to alleviate the financial worries of individuals who are employed in the unorganised sector, thus enabling them to be financially independent in their later years.

  • Nominee facility 

In case of a beneficiary’s death, his/her spouse becomes entitled to the benefits of this scheme. They can either terminate their account and avail the entire corpus in a lump sum or choose to receive the same pension amount as the original beneficiary. In case of death of both the beneficiary and his/her spouse, a nominee shall be entitled to receive the entire corpus amount.

Atal Pension Scheme Eligibility Criteria

To be able to invest in the Atal Pension Yojana Scheme and receive a pension from there, individuals need to satisfy the following requirements – 

  1. Must be an Indian citizen.
  2. Should possess an active mobile number.
  3. Must contribute to the scheme for a minimum of 20 years.
  4. Should be within the age bracket of 18 years and 40 years.
  5. Must hold a bank account linked with his/her Aadhaar.
  6. Shall not be a beneficiary of any other social welfare scheme.

Other than that, individuals who have been beneficiaries under the Swavalamban Scheme are automatically eligible and thus migrated to this scheme.

How to Apply for Atal Pension Yojana?

All banks in India are empowered to initiate the opening of a pension account under the Atal Pension Yojana. The descriptive steps to apply for APY are – 

  • Visit the nearest branch of the bank where you have an account.
  • Duly fill out the application form with required details.
  • Submit it along with two photocopies of your Aadhaar card.
  • Provide your active mobile number.

One can also download the application form from the official website of a bank and then continue with the steps mentioned above.

Atal Pension Yojana – Frequently Asked Questions 

Ques. Is it possible to open a pension account under APY without having a savings account?

Ans. No, having an active savings account is a prerequisite to opening a pension account under APY.

Ques. Is it compulsory to declare a nominee when applying for Atal Pension Scheme?

Ans. Yes, one needs to nominate another individual and subsequently provide their KYC details when applying for Atal Pension Scheme.

Ques. Is it possible to have more than one pension account under this scheme?

Ans. No, one individual can only have a single pension account under this scheme.

Ques. Is there a way to apply for APY online?

Ans. No, currently APY online application is not provided. One has to go to their respective bank’s branch and fill out the forms.

Ques. What is the age criteria to join this scheme?

Ans. The minimum age to apply for this scheme is 18 years and the maximum age is 40 years. However, college students can also apply for this scheme. The minimum contribution period for the APY scheme is 20 years. You will start receiving your pension once you are 60 years old.

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