Atal Pension Yojana – Government Guaranteed Pension Scheme for the Unorganised Sector

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

88% of India’s total labour force of 47.29 crore belongs to the unorganised sector, in which the workers do not have any formal provision of getting a regular pension payment on retirement. Moreover, due to increasing labour wages and better medical facilities, these people also face a risk of increasing longevity. So, this work force would require some kind of assured income guarantee to sustain itself in the coming years.

Launching Atal Pension Yojana (APY) from June 1, 2015

To encourage workers in the unorganised sector to voluntarily save for their retirement, the government of India will be launching a new scheme, called Atal Pension Yojana (APY), from 1st June, 2015. Finance Minister Arun Jaitley announced this scheme in his budget speech on February 28th.

This scheme will replace the UPA government’s Swavalamban Yojana – NPS Lite and will be administered by the Pension Fund Regulatory and Development Authority (PFRDA). The benefits of this scheme in terms of fixed pension will be guaranteed by the government and the government will also make contribution to these accounts on behalf of its subscribers.

Under this scheme, a subscriber would receive a minimum fixed pension of Rs. 1,000 per month and in multiples of Rs. 1,000 per month thereafter, up to a maximum of Rs. 5,000 per month, depending on the subscriber’s contribution, which itself would vary on the age of joining this scheme.

The minimum age of joining this scheme is 18 years and maximum age is 40 years. Pension payment will start at the age of 60 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more.

The Central Government would also co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, i.e., from 2015-16 to 2019-20, who join the NPS before 31st December, 2015 and who are not income tax payers. The existing subscribers of Swavalamban Scheme would be automatically migrated to APY, unless they opt out.

Who is eligible for Atal Pension Yojana?

Any Citizen of India, aged between 18 years and 40 years, who has his/her savings bank account opened and also possesses a mobile number, would be eligible to subscribe to this scheme.

Government Funding – Indian Government would provide (i) fixed pension guarantee for the subscribers; (ii) would co-contribute 50% of the subscriber contribution or Rs. 1,000 per annum, whichever is lower, to eligible subscribers; and (iii) would also reimburse the promotional and development activities including incentive to the contribution collection agencies to encourage people to join the APY.

Who is eligible for Government Co-Contribution in Atal Pension Yojana?

Subscribers of this scheme, who are not covered under any other statutory social security scheme and are not income tax payers, would be eligible for the government’s co-contribution of up to Rs. 1,000 per annum.

Social Security Schemes which are not eligible for Government Co-Contribution

  • Employees’ Provident Fund (EPF) & Miscellaneous Provision Act, 1952
  • The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948
  • Assam Tea PlantationProvident Fund and Miscellaneous Provision, 1955
  • Seamens’ Provident Fund Act, 1966
  • Jammu Kashmir Employees’ Provident Fund & Miscellaneous Provision Act, 1961
  • Any other statutory social security scheme

Minimum/Maximum Pension Payable – This scheme will pay a minimum pension of Rs. 1,000 per month and a maximum pension of Rs. 5,000 per month, depending on the subscriber’s own contribution per month.

Minimum/Maximum Period of Contribution – As the minimum age of joining APY is 18 years and maximum age is 40 years, minimum period of contribution by the subscriber under this scheme would be 20 years and maximum period of contribution would be 42 years.

Atal Pension Yojana – Contribution Period, Contribution Levels, Fixed Monthly Pension and Return of Corpus to the Nominees of Subscribers

Picture 3

Internal Rate of Return (IRR) – Thanks to the government funding of Rs. 1,000 per annum per subscriber account for 5 years, your account would generate an IRR of approximately 0.66% per month or 8% per annum. This pension amount per month is fixed and the government has made it clear that if the actual returns on the pension contributions are higher than the assumed returns, such excess return will be credited to the subscribers’ accounts, resulting in enhanced pension payment to the subscribers.

Minimum Contribution – A subscriber aged 18 years will have to contribute a minimum of Rs. 42 per month in order to get Rs. 1,000 pension per month starting 60 years of age. For a 40 years old subscriber, his/her minimum contribution would be Rs. 291 per month. The contribution levels would vary and would be low if subscriber joins early and increase if he joins late.

Maximum Contribution – A subscriber aged 40 years will have to contribute Rs. 1,454 per month in order to get Rs. 5,000 pension per month starting 60 years of age. For a 18 years old subscriber, his/her contribution for Rs. 5,000 monthly pension would be Rs. 210 per month.

Can I increase or decrease my monthly contribution for higher or lower pension amount?

The subscribers can opt to decrease or increase pension amount during the course of accumulation phase, as per the available monthly pension amounts. However, the switching option shall be provided only once in a year during the month of April.

What will happen if sufficient amount is not maintained in the savings bank account for contribution on the due date?

Non-maintenance of required balance in the savings bank account for contribution on the specified date will be considered as default. Banks are required to collect additional amount for delayed payments, such amount will vary from minimum Re. 1 to Rs. 10 per month as shown below:

(i) Re. 1 per month for contribution upto Rs. 100 per month

(ii) Rs. 2 per month for contribution upto Rs. 101 to 500 per month

(iii) Rs. 5 per month for contribution between Rs. 501 to 1,000 per month

(iv) Rs. 10 per month for contribution beyond Rs. 1,001 per month.

Discontinuation of payments of contribution amount shall lead to following:

After 6 months account will be frozen.

After 12 months account will be deactivated.

After 24 months account will be closed.

Subscriber should ensure that the Bank account to be funded enough for auto debit of contribution amount. The fixed amount of interest/penalty will remain as part of the pension corpus of the subscriber.

Post-Retirement Rate of Return – Considering a retirement corpus of Rs. 1.7 lakh and monthly pension of Rs. 1,000, this scheme is going to generate a return of 0.59% per month or 7.1% per annum for its subscribers. I think this return is also on a lower side.

Nomination Facility – This scheme will also provide the nomination facility to its subscribers. In case of the subscriber’s death after attaining 60 years of age, the whole corpus generating the pension income to the subscriber would be returned back to the nominee of the subscriber. In case of untimely death of the subscriber before 60 years of age, the balance would be returned back to the nominee of the subscriber.

Where to open APY Accounts – You need to approach points of presence (PoPs) and aggregators under existing Swavalamban Scheme. These agencies would enrol you through architecture of National Pension System (NPS).

Points of Presence & Aggregators

Application Form – Here you have the links to the application form for subscribing to Atal Pension Yojana – Application Form in EnglishApplication Form in Hindi

I think a subscriber should opt for a minimum monthly contribution of around Rs. 167 or so, which would make it approximately Rs. 2,000 annual contribution. 50% of Rs. 2,000 i.e. Rs. 1,000 would be contributed by the government as well. So, the subscriber will get the maximum benefit of government funding.

As mentioned above, the scheme would start from June 1, 2015. So, interested people will have to wait till then to open an account. If you have any other query regarding this scheme, please share it here.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Application Form in English

Application Form in Hindi

926 thoughts on “Atal Pension Yojana – Government Guaranteed Pension Scheme for the Unorganised Sector”

  1. The members of any social security scheme who are income tax payers can also join APY and avail the benefit of minimum guaranteed monthly pension but will not receive any government contribution. Seen from (Annexure A) of Punjab Nation Bank.
    If any body paid income tax 5/6 years back and later his income is not taxable can he do APY.



  4. I have opted for pension plan since nov 2015. Just want to know how this pension amount will be reimbursed. Do we have to contact our bank or any other source to get the pension after 60 years?

  5. How is the age for enrollment calculated? Is it as per nearest birthday or only number of years completed?
    What is the lump sum amount for various pension amounts? Does it depend upon corpus accumulated or fixed by govt.?

    If the policy holder expires before 60, what lump sum amount will be paid to nominee for 5000/- pension scheme?

    In case the policy holder expires before 60,
    do the spouse need to pay premium for remaining term?
    Will the spouse start getting pension (immediately or after 60 yrs) or will get lump sum amount?
    If spouse gets pension, after spouse expiry, will the nominee get lump sum?

    If no premium deposited for 24 months, the account gets closed. What will happen to corpus accumulated?

    Is it possible to withdraw Lump sum amount / accumulated corpus amount any time during the policy (before 60 yrs age) / (after start of pension by self or by spouse due to death of policy holder)?

    If the spouse and nominee are same, how will it work for providing pension to spouse and lump sum to nominee?

    I know the queries are many, but I believe answers to these will help many get a clarity, and decide on subscribing for this scheme.

  6. Hi Shiv,
    I have open an account in Atal pention yogana in june 2015 .My APY monthly installments are debiting regularly.But I do not receive PRAN card yet.Bankers are saying that they are not having any information regarding PRAN . from where we get the information regarding this.

  7. Dear Sir,


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    but I never found any interesting article like yours.
    It is beautiful value sufficient for me. In my view, if
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  9. My birth date is 06/08/1983 and I want to enroll for this pension scheme for 5000 pension how much do I need to pay every month? And if I wish to withdraw or stop the service in between will I get back whatever I paid till the time of stopping this service?

  10. Hi myself Ms.Hemalatha from Mumbai. I want to apply for this scheme, so just need more guidance and more clearity no the terms and conditions. Can i get the contact person name and number, so that i can clear my doubts…. Pls provide me the contact details asap.

  11. I wanted to discontinue from this scheme. Banker didn’t tell me any details. I wanted my money back.

  12. What is the procedure to withdraw the apy scheme. I didn’t like the scheme… Will my money get returned… need a response. .. u cannot play or cheat with public money…..

    1. Hello Kavitha,
      Has the scheme details modified recently? Can you please elaborate why you feel its cheating with public money as many here on the forum may have registered under APY.

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