The Atal Pension Yojana (APY) is a government-backed pension scheme that aims to provide a steady income after retirement, especially to individuals working in the unorganised sector. Eligible subscribers can select a guaranteed minimum monthly pension of ₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 from the age of 60 years.
The scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the National Pension System (NPS) framework. Subscribers must make regular contributions until they reach age 60. However, one important eligibility condition that people should be aware of is that anyone who is currently or has previously been an income-tax payer cannot open a new Atal Pension Yojana (APY) account from October 1, 2022. However, subscribers who joined the scheme on or before September 30, 2022, can continue their existing APY accounts.
In this blog, we explore the key aspects of the Atal Pension Yojana Scheme for individuals planning for retirement, particularly those without access to a formal employer-sponsored pension.
What is the Atal Pension Yojana Scheme?
The Atal Pension Yojana Scheme was launched by the Government of India in 2015 to encourage retirement planning, particularly among workers in the unorganised sector and individuals who may not have access to a formal pension system.
The scheme follows a straightforward structure. Subscribers make regular contributions until they reach the age of 60 years. After turning 60, they receive a government-guaranteed minimum monthly pension, based on the pension option selected when they joined the scheme.
Under the Atal Pension Yojana Scheme, subscribers can choose from five minimum monthly pension options:
- ₹1,000 per month
- ₹2,000 per month
- ₹3,000 per month
- ₹4,000 per month
- ₹5,000 per month
The selected pension continues to be paid to the subscriber for their lifetime.
APY also provides a spouse pension benefit. After the subscriber’s death, the spouse is entitled to receive the same monthly pension until their death. Following the death of both the subscriber and spouse, the accumulated pension wealth is returned to the nominee.
Who is Eligible for the Atal Pension Yojana Scheme?
To be eligible for the Atal Pension Yojana (APY), an individual must:
- Be an Indian citizen
- Be aged between 18 and 40 years
- Have a savings bank account or post office savings bank account
- Not be an income-tax payer when opening a new APY account
The government has clarified that, from October 1, 2022, individuals who are or have been income-tax payers under the Income-tax Act, 1961, cannot open a new Atal Pension Yojana account.
However, if a subscriber becomes an income-tax payer after joining the scheme, this does not automatically make them ineligible. According to PFRDA, they can continue their APY account and keep making the required contributions.
Importantly, APY eligibility is not limited to workers in the unorganised sector. Government employees, public-sector employees, and existing NPS subscribers can also join the scheme if they meet the prescribed eligibility criteria. NRIs may also open an APY account, provided they satisfy the applicable eligibility conditions, according to PFRDA.
How Much Do You Need to Contribute to Atal Pension Yojana Scheme?
The Atal Pension Yojana contribution is determined primarily by two factors: the subscriber’s age at the time of joining and the pension amount selected.
Joining the scheme at a younger age generally means a longer contribution period and a lower contribution requirement for the chosen pension amount. Subscribers can make their contributions monthly, quarterly, or half-yearly through the auto-debit facility.
As per government information, the monthly contribution for pension slabs ranging from ₹1,000 to ₹5,000 can start from ₹42 and go up to ₹210 for subscribers joining at age 18. For those joining at age 40, the monthly contribution can range from ₹291 to ₹1,454, depending on the pension option selected.
Atal Pension Yojana Contribution at Different Ages
The official Atal Pension Yojana contribution varies based on the subscriber’s age and the pension amount chosen. The applicable contributions are:
- For subscribers joining at age 18:
- ₹42/month for a ₹1,000 pension — ₹504/year
- ₹84/month for a ₹2,000 pension — ₹1,008/year
- ₹126/month for a ₹3,000 pension — ₹1,512/year
- ₹168/month for a ₹4,000 pension — ₹2,016/year
- ₹210/month for a ₹5,000 pension — ₹2,520/year
- For subscribers joining at age 30:
- ₹116/month for a ₹1,000 pension — ₹1,392/year
- ₹231/month for a ₹2,000 pension — ₹2,772/year
- ₹347/month for a ₹3,000 pension — ₹4,164/year
- ₹462/month for a ₹4,000 pension — ₹5,544/year
- ₹577/month for a ₹5,000 pension — ₹6,924/year
- For subscribers joining at age 40:
- ₹291/month for a ₹1,000 pension — ₹3,492/year
- ₹582/month for a ₹2,000 pension — ₹6,984/year
- ₹873/month for a ₹3,000 pension — ₹10,476/year
- ₹1,164/month for a ₹4,000 pension — ₹13,968/year
- ₹1,454/month for a ₹5,000 pension — ₹17,448/year
The annual contribution amounts are calculated by multiplying the applicable monthly contribution by 12. Subscribers can also choose to make their APY contributions quarterly or half-yearly, as permitted under the scheme.
Why Start Atal Pension Yojana Scheme Early?
The Atal Pension Yojana contribution can vary considerably depending on the age at which a person joins the scheme.
For the ₹5,000 monthly pension option, an 18-year-old needs to contribute ₹210 per month, whereas a person joining at age 40 needs to contribute ₹1,454 per month. The main reason is the difference in the contribution period: younger subscribers have more years to contribute before reaching the age of 60.
As per the official APY contribution chart, an 18-year-old choosing the ₹5,000 pension option contributes for 42 years, while a subscriber joining at age 40 contributes for 20 years. This is why PFRDA recommends joining APY at an early age, subject to meeting the scheme’s eligibility criteria.
How to Open an APY Account?
An eligible individual can visit the bank branch or post office where they maintain their savings account and submit the APY registration form. Eligible subscribers can also use the online eAPY facility available through the PFRDA website.
Once the account is opened, the Atal Pension Yojana contribution is automatically debited from the linked savings bank account or post office savings account based on the payment frequency selected by the subscriber.
An individual can hold only one APY account. However, eligible family members aged between 18 and 40 years can independently open and maintain their own APY accounts.
The Atal Pension Yojana Scheme offers eligible individuals a way to create a predictable post-retirement income by making regular contributions during their working years. However, the maximum pension is limited to ₹5,000 per month, so individuals should assess whether this amount will adequately cover their retirement needs.
Therefore, APY can be considered as one part of a broader retirement plan rather than relying on it as the sole source of income after retirement.
