Atal Pension Yojana - Things you must know

To inculcate a habit of compulsory saving for retirement, the government of India in 2015 announced the Atal Pension Yojana for Private sector employees or employees working with such an organization that does not provide them a pension. The goal of the scheme is to ensure that no Indian citizen has to worry about any illness, accidents, or diseases in old age, giving a sense of security.  It is an extension of the recognized National Pension Scheme and replaces Swavalamban Pension Yojana which wasn’t accepted well by the people.

The Government would also make a co-contribution of 50% of the total contribution, or Rs. 1000 per annum, whichever is lower, to all the subscribers who are not a part of any other statutory social security schemes (For eg: Employee’s provident fund), or should not be paying income taxes.

1. How does the scheme work?

Under this scheme, you can choose how much pension you want after you turn 60 and your contribution amount would be determined as per the table below. You contribute that fixed amount till 60 and then post you are 60, you would get the pre-selected pension amount till you are alive. After your death, your spouse would get the pension amount. Post your spouse's death, your nominee would get the lump sum amount. 

Let us understand this with an example, For instance, Riya is 23 and she decides that she will contribute for a pension of INR 5000, so she would have to contribute INR 346 per month till she is 60 and post that she would get a pension of INR 5000 from APY.

There is an option of getting a fixed pension of Rs 1000, Rs 2000, Rs 3000, Rs 4000, or Rs 5000 on attaining an age of 60.

The following table tells you how much you need to contribute per annum based on your age and pension plan.

2. Eligibility

To avail of benefits from the Atal Pension Yojana, you must fulfill the below requirements:

  1. Must be a citizen of India.
  2. Must be between the age of 18-40
  3. Should make contributions for a minimum of 20 years.
  4. Must have a bank account linked with your Aadhar
  5. Must have a valid mobile number

Those who are availing of the benefits of Swavalamban Yojana will be automatically migrated to Atal Pension Yojana.

3. How to Apply?

Follow these steps to avail the benefits of APY

  1. All nationalized banks provide the scheme. You can visit any of these banks to start your APY account.
  2. Atal Pension Yojana forms are available online and at the bank. You can download the form from the official website.
  3. The forms are available in English, Hindi, Bangla, Gujarati, Kannada, Marathi, Odia, Tamil, and Telugu.
  4. Fill up the application form and submit it to your bank.
  5. Provide a valid mobile number, if you haven’t already provided to the bank.
  6. Submit a photocopy of your Aadhaar card.

You will be sent a confirmation message when the application is approved. Also, you can apply for it online from your bank’s official website.

4. How to Exit From Atal Pension Yojana?

Following are the 3 withdrawal rules :

Subscriber's Death

Upon the death of a beneficiary before 60 years of age, here are the two options one can follow:

  • Close the APY Account

If the spouse is keen to close the APY account, he/she will get the accumulated corpus. In case a spouse is not present, the nominee will get the pension amount.

  • Continue the APY Account

If the spouse wants to continue the APY account, one can maintain the account in his/her name. The spouse will get the same amount as that of the beneficiary until death.

Voluntary Exit

The scheme offers flexibility in providing a voluntary exit from this scheme. In this case, the Government will only refund your accumulated contributions and earned interest over the years. You are not eligible to get the Government co-contributions in case of voluntary withdrawal.

Exit Due to Illness

You can withdraw from this scheme based on specified illness. Accordingly, the Government will refund your accumulated pension corpus to your bank account.

5. Tax Benefits

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 Section 80CCD (1B).

As you would notice, the contribution amount is very low, but you can consider the same while you are investing in NPS for the additional 50,000 tax deduction under section 80CCD(1B).

6. Some things you must know about APY

  • The Atal Pension Yojana scheme is passed by the Parliament of India in the budget session. The scheme will not be discontinued if there is a change in the Government, and your contribution is safe. Any succeeding Government has the right to only change the name of the pension scheme.
  • Since you will be making periodic contributions, the amounts will be debited automatically from your account. You need to make sure that you have a sufficient balance in your account before each debit.
  • You can increase your premium at your will. You just have to visit your bank and talk to your manager and make the necessary changes.
  • The Indian Government does not permit the opening of multiple accounts for Atal Pension Yojana. Therefore, you are eligible to open only 1 account.
  • APY Helpline Number:- 1800-110-069/ 1800-180-1111/ 1800-110-001

7. Account Maintenance charges

These charges are very minuscule and should not really be considered as a major deciding factor for this investment. We have shared it for your information. 

8. Penalty Terms

If you delay the payment of the contribution, then the below-mentioned penalty will be charged:

  • Rs.1 per month for contributions up to Rs.100 per month.
  • Rs.2 per month for contributions up to Rs.101 to 500 per month.
  • Rs.5 per month for contributions between Rs.501 to 1000 per month.
  • Rs.10 per month for contributions beyond Rs.1001 per month.

If there's a continuous default for 6 months, your pension account will be frozen and if there's a continuous default for 12 months, the account will get closed and whatever balance is left after the above-said deductions will be given to the subscriber.

It is best if you set up an auto-debit from your bank account to avoid these penalty charges.

Wealth Cafe Advice

We understand the pension received each month is a small amount, however, it is a great pension (and the only government security pension scheme) available to Indians. And also, the numbers are based on an average return of 8%. APY is a great investment option for you to start your investing journey and develop the habit of saving for your retirement, especially where your employer has no EPF and other retirement options available. Further, where you and your spouse both apply for it, a fixed pension of INR 10,000 post-retirement is also set so you just have to work towards the balance amount. In conclusion, there are no negatives to these schemes, with very small early contributions, you can get a fixed pension and insurance for your nominee with a government guarantee. We would highly recommend everyone to apply for this scheme and make the most of it. 

If you have any concerns with respect to this scheme, you can email us your queries at

You can use the calculator provided by the government to calculate your corpus in comparison to your Invested amount - APY CALCULATOR

You can also check for other benefits provided by the government:

  1. Pradhan Mantri Jan Arogya Yojana (PMJAY)
  2. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
  3. Sukanya Samriddhi Yojana
  4. Pradhan Mantri Shram Yogi Maan-Dhan
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