Atal Pension Yojana: Is it the Right Choice for Your Retirement Planning?

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Atal Pension Yojana

Atal Pension Yojana is a government scheme to give pensions to people in India who work in the informal sector (e.g. farmers, self-employed, laborers) once they reach 60 years old. It was started in 2015 and is available to Indian citizens between 18-40 years old.


In India, the unorganized sector constitutes more than 80% of the total workforce and is characterized by low-income levels and a lack of social security. This scheme aims to provide affordable and accessible pensions for all. The Atal Pension Yojana Plan is an excellent option for those who are unsure about how to go about it.

The Atal Pension Yojana is a defined benefit pension scheme and is backed by the Government of India. Which makes it a safe and reliable option for retirement planning. The scheme offers a pension of Rs. 1000 to Rs. 5000 per month depending on the subscriber’s contributions, and the pension amount is guaranteed by the government. It is also a low-cost pension scheme as the government offers a subsidy to the subscribers, making it accessible to a wider audience.

In this article, we will take a detailed look at the Atal Pension Yojana, including its features, benefits, and drawbacks, to help you determine whether it is the right choice for your retirement planning needs. We will discuss the eligibility criteria, contribution amount, and the process of enrolling in the scheme, among other things. By the end of the article, you should have a clear understanding of the APY and its suitability for your retirement planning.

What is Atal Pension Yojana?

Atal Pension Yojana (APY) is a pension scheme launched by the Government of India in 2015, aimed at providing a secure and sustainable source of income to unorganized sector workers after their retirement. The scheme provides a fixed minimum pension of INR 1,000 to INR 5,000 per month starting at the age of 60. It is a retirement benefits scheme that provides financial security to individuals who do not have any formal pension system in place.

The scheme is open to all citizens of India who are 18 years of age or above and are not part of any other statutory social security scheme. The subscribers must have a savings bank account where the contributions towards the pension scheme can be made through an auto-debit facility. The minimum age to join the scheme is 18 years, and the maximum age is 40 years.

Atal Pension Yojana
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Atal Pension Yojana is a voluntary and contributory pension scheme where the subscribers have to contribute regularly towards the scheme. You can pay the contributions monthly, quarterly, half-yearly, or yearly. The amount of contribution depends on the age of the subscriber, and the pension amount that the subscriber intends to receive. The contribution period ranges from 20 years to 42 years, and the subscriber has to contribute till the age of 60.

Atal Pension Yojana Scheme

The scheme is portable, which means that the subscribers can switch to any other bank or post office without affecting the benefits of the scheme. APY provides a unique Government of India guaranteed minimum pension for the subscribers, and it is managed by the Pension Fund Regulatory and Development Authority (PFRDA).

In conclusion, Atal Pension Yojana is an excellent opportunity for unorganized sector workers to secure their future after retirement. It provides a fixed minimum pension, and the contributions made towards the scheme are eligible for tax benefits under section 80CCD of the Income Tax Act. The scheme is simple, transparent, and provides a secure and sustainable source of income after retirement.

How does Atal Pension Yojana work?

Atal Pension Yojana is a scheme launched by the Government of India to provide a defined pension to the subscribers of the scheme. The scheme is open to all Indian citizens between the age of 18 and 40 years who have a savings bank account. Here’s how the scheme works:


To subscribe to the scheme, an individual has to visit a bank branch and fill out the necessary forms. The subscriber needs to choose the desired pension amount, which can be between Rs. 1000 and Rs. 5000 per month. The subscriber also has to choose the contribution period, which can be between 20 to 40 years.


The subscriber has to make contributions to the scheme every month. The amount of contribution is based on the desired pension amount and the contribution period chosen. The contribution can be made through auto-debit from the subscriber’s savings bank account.


Upon reaching the age of 60 years, the subscriber starts receiving the pension. The pension amount is determined based on the subscriber’s contribution and the investment return earned by the scheme. The pension amount is paid to the subscriber every month till death.

Death Benefit

In case of the subscriber’s death, the spouse of the subscriber is eligible to receive the pension. If both the subscriber and the spouse pass away, the nominee of the scheme is eligible to receive the pension.


The scheme is portable. This means that the subscriber can continue with the scheme even if he changes his job or location. The subscriber has to inform the bank about the change of job or location.

In conclusion, Atal Pension Yojana is a simple and straightforward scheme that provides a defined pension to subscribers. This scheme is an excellent option for those who want to secure their financial future in their old age. The scheme is also suitable for those who do not have any other pension plan in place.

Advantages of Atal Pension Yojana

The scheme offers several advantages that make it an attractive option for retirement planning. Some of the key advantages of APY are as follows:

Atal Pension Yojana Benefits

  1. Affordability: The biggest advantage of APY is its affordability. The minimum monthly contribution starts from as low as Rs. 42 and goes up to Rs. 210, depending on the age of the subscriber. This makes it accessible to individuals with a low or modest income.
  2. Guaranteed Pension: APY offers a guaranteed pension of Rs. 1000 to Rs. 5000, depending on the contribution made by the subscriber. This offers a degree of financial stability and peace of mind during retirement.
  3. Backed by the Indian Government: APY is a government-backed scheme, which offers a degree of safety and security to the subscribers. The scheme is managed by the Pension Fund Regulatory and Development Authority (PFRDA) and the government provides a co-contribution to eligible subscribers for a limited period.
  4. Flexibility: APY allows subscribers to choose their contribution amount and tenure, based on their financial capacity and retirement goals. This flexibility helps subscribers tailor the scheme to their individual needs and financial circumstances.
  5. Portability: The APY account is portable, which means that subscribers can continue their contribution even if they change their job or place of residence. This ensures that subscribers are not required to start the process again if they move to another city or change their occupation.
  6. Wide Coverage: APY has wide coverage, with over 50 crore bank accounts being linked to the scheme. This makes it accessible to a large section of the population and helps them plan for their retirement effectively.

In conclusion, APY offers several advantages, including affordability, guaranteed pension, government backing, flexibility, portability, and wide coverage. These features make it an attractive option for those looking to secure their financial future during retirement.

Disadvantages of Atal Pension Yojana

Despite its many advantages, the scheme has some disadvantages that must be considered before enrolling in it. Here are some of the disadvantages of the Atal Pension Yojana:

Downsides of this scheme

  1. Limited Guarantee: APY is a government-backed scheme, but there is no complete guarantee that the pension will be received as promised. The scheme’s success depends on various factors such as the government’s financial stability and its ability to make regular contributions.
  2. Eligibility: Only people from the unorganized sector can enroll in APY, which excludes many individuals who may require a pension in the future. For example, salaried employees, professionals, and self-employed individuals are not eligible for this scheme.
  3. Fixed Pension Amount: APY offers a fixed pension amount that may not be enough for everyone’s needs, particularly those with high monthly expenses. In such cases, an individual may need to consider other pension options in addition to APY.
  4. Contribution Amount: APY requires a substantial contribution to be made over a long period of time, which can be a challenge for individuals with limited resources. In such cases, enrolling in APY may not be a feasible option.
  5. No Death Benefit: Unlike other insurance plans, APY does not offer any death benefit to the nominee in case of the subscriber’s demise before the pension is paid out. This means that you will not lose your contributions.
  6. No Partial Withdrawal: APY does not allow for partial withdrawals, which means that if a subscriber needs money for any emergency, they will have to withdraw the entire amount, including the pension and the contributions made till that point.
  7. Lack of Awareness: APY is a relatively new scheme, and there is a lack of awareness about it among the public. This lack of awareness may result in poor enrolment, and thereby, reduce the scheme’s potential impact.

Is Atal Pension Yojana the Right Choice for Your Retirement Planning?

Atal Pension Yojana is a defined benefit pension scheme. This means the pension amount is guaranteed and not linked to the market performance.

Here are some of the factors to consider before deciding if Atal Pension Yojana is the right choice for you:

  1. Age: Atal Pension Yojana is meant for workers in the unorganized sector between the ages of 18-40 years. The earlier you enroll, the lower your monthly contributions will be. And the longer the time horizon to grow your pension corpus.
  2. Income: The pension amount under APY is directly proportional to the contributions made. If you have a higher income, you can afford to make higher contributions and receive a higher pension amount.
  3. Financial Goals: If your financial goals include more than just a basic pension, APY may not be the right choice for you. APY only offers a fixed pension amount, and the pension corpus is not accessible before the age of 60 years.
  4. Risk Appetite: The government guarantees a defined benefit pension amount in APY and bears the investment risk.. However, if you are okay with risk, other pension schemes with a higher return potential may be a better choice.

Atal Pension Yojana offers fixed pensions to unorganized workers in old age. Whether Atal Pension Yojana is right for you depends on factors like age, income, financial goals, and risk tolerance. It is essential to carefully evaluate these factors and consider all options before making a decision.

Atal Pension Yojana Calculator

The Atal Pension Yojana Calculator is a tool that helps potential subscribers estimate the pension amount they may receive upon reaching 60 years of age.

You can find the Atal Pension Yojana Calculator on this link:

The calculator takes into account factors such as the subscriber’s age, contribution amount, and interest rate to give an estimate of the expected pension amount. The calculator is available online, making it easily accessible and convenient for users.

Atal Pension Yojana Chart

The Atal Pension Yojana Chart is a graphical representation of the pension scheme offered by the government of India. It shows the amount of money that a subscriber needs to contribute on a monthly basis, based on their age of joining and the pension amount they desire to receive after their retirement.

Atal Pension Yojana Chart
Source: subscribers’ contribution chart by NPSCRA NSDL

The chart also highlights the guaranteed pension amount that the subscriber will receive, regardless of the market conditions. This tool helps individuals to plan their retirement effectively and make informed decisions regarding their pension plans. The Atal Pension Yojana Chart makes it easier for people to understand the scheme and plan for their financial future.


The government backs Atal Pension Yojana to secure the financial future of those in need of a pension after their retirement. This scheme provides a pension plan that can help individuals secure their retirement years without any financial stress. Atal Pension Yojana is an affordable retirement plan with a minimum monthly contribution of ₹42.

In conclusion, Atal Pension Yojana is a great choice for individuals who are looking for a pension plan that is affordable, easy to understand, and provides a secure financial future. It’s ideal for those seeking an affordable retirement option without the ability to save. However, it is important to keep in mind the age limit for joining the scheme. And the pension amount will only be provided after the age of 60. Individuals should carefully evaluate their financial requirements and plans before making a decision on the Atal Pension Yojana.

Overall, Atal Pension Yojana is a great option for those who are looking for a retirement plan that is cost-effective, flexible, and secure. It is an opportunity for individuals to take control of their financial future and ensure a secure retirement. With its low cost, easy process, and government backing, Atal Pension Yojana is an excellent choice for those looking to secure their financial future.


Here are some references that you can use to learn more about Atal Pension Yojana:

  1. Official website of the Pension Fund Regulatory and Development Authority of India (PFRDA) –
  2. Atal Pension Yojana (APY) –
  3. Ministry of Finance, Government of India –
  4. Pension Funds in India –

Also, check out the e Mudra Loan in detail to start a business.

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