What is Atal Pension Yojana (APY)?
Atal Pension Yojana (APY) is a government-backed pension scheme launched in 2015, designed primarily for workers in the unorganized sector who lack access to formal pension systems. Named after former Prime Minister Atal Bihari Vajpayee, it guarantees a fixed monthly pension of ₹1,000 to ₹5,000 after the subscriber turns 60.
APY is administered by the Pension Fund Regulatory and Development Authority (PFRDA) and provides complete security through government guarantee. As of 2026, over 5 crore subscribers have enrolled in this scheme.
Key Features of APY
- Guaranteed Pension: ₹1,000 to ₹5,000 per month after age 60.
- Eligibility: Indian citizens aged 18-40 years (non-income tax payers from Oct 2022).
- Contribution Period: Minimum 20 years (till age 60).
- Spouse Benefit: Same pension amount continues for spouse after subscriber's death.
- Nominee Benefit: Corpus amount returned to nominee on death of both subscriber and spouse.
- Government Co-contribution: 50% of contribution (max ₹1,000/year) for 5 years for those who joined before Dec 2015 and are not covered by any other scheme.
- Auto-debit: Contributions automatically debited from linked bank account.
- Tax Benefit: Contributions qualify for 80CCD(1B) deduction up to ₹50,000.
APY Contribution Formula
APY contributions are pre-determined by the government based on actuarial calculations. The contribution depends on:
- Joining Age: Lower age = lower contribution (more time to accumulate)
- Pension Amount: Higher pension = higher contribution
Corpus Amount by Pension
| Monthly Pension | Corpus for Nominee |
|---|---|
| ₹1,000 | ₹1,70,000 |
| ₹2,000 | ₹3,40,000 |
| ₹3,000 | ₹5,10,000 |
| ₹4,000 | ₹6,80,000 |
| ₹5,000 | ₹8,50,000 |
APY Eligibility (Updated Oct 2022)
- Age: 18-40 years at the time of joining.
- Bank Account: Must have a savings bank account.
- Mobile Number: Linked with bank account for OTP.
- Not an Income Tax Payer: From 1st Oct 2022, income tax payers are NOT eligible.
- Not a Government Employee: Should not be member of any statutory social security scheme.
APY vs NPS: Which is Better?
| Feature | APY | NPS |
|---|---|---|
| Pension Guarantee | Fixed ₹1K-5K | Market-linked |
| Max Investment | ₹1,318/month | No limit |
| Tax Benefit | 80CCD(1B) ₹50K | 80CCD(1B) ₹50K + 80CCD(1) |
| Returns | ~8% (implicit) | 9-12% (equity) |
| Best For | Low-income workers | Salaried/Self-employed |
Frequently Asked Questions (FAQs)
What is the APY contribution for a 30-year-old for ₹5,000 pension?
A 30-year-old subscriber needs to contribute ₹577 per month to receive ₹5,000 monthly pension after age 60. The total contribution over 30 years would be ₹2,07,720.
Can I change my pension amount after joining APY?
Yes, you can increase or decrease your pension amount once per year during April. The contribution amount will be adjusted accordingly based on your current age.
What happens if I miss APY contributions?
A penalty of ₹1-10 per month is charged based on contribution amount. After 6 months of non-payment, account is frozen. After 12 months, account is deactivated. After 24 months, account is closed and only accumulated amount is returned.
Can I have both APY and NPS accounts?
Yes, you can have both APY and NPS accounts simultaneously. However, you cannot have multiple APY accounts. Having both allows you to maximize retirement savings and tax benefits.
Is APY pension taxable?
Yes, the monthly pension received under APY is taxable as per your income tax slab. However, contributions made are eligible for tax deduction under Section 80CCD(1B) up to ₹50,000 per year.