Atal Pension Yojana: A Complete Guide

Features and Benefits of Atal Pension Yojana:

The Atal Pension Yojana (APY), named after former Prime Minister Atal Bihari Vajpayee, is a pension scheme for people from the unorganised sector who want to join the National Pension System (NPS) and are not subscribed to any other social security net. Simply put, it’s for those from the unorganised sector who want to earn a fixed income after their retirement. A person under Atal Pension Yojana, can earn a life-long monthly pension from the age of 60, depending upon their contribution, which varies according to their date of joining.

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Features and benefits

• If a person from the unorganised sector feels insecure about his/her post-retirement income, Atal Pension Yojana would usher in a big relief for their family. Thousands of people in our country come from this sector and are employed as fishermen, forest workers, small-scale industry labourers, and daily wage earners.

• Atal Pension Yojana subscribers will get a monthly pension from the age of 60. A person joining at 18 and contributing Rs. 42 till the age of 60, will get Rs. 1,000 as monthly pension.

• You can choose between pension amounts of Rs. 1,000/2,000/3,000/4,000 and 5,000.

• Subscribers can avail auto-debit facility where the monthly contribution will be automatically from the person’s bank account.

• Subscribers can also contribute their premium on a quarterly or half-yearly basis, following a modification announced by the government in August, 2015.

• In case of death, the subscriber’s monthly pension will be paid to the spouse. The nominee of the account will receive the corpus up to a maximum of Rs. 8.5 lakhs in case both the subscriber and the spouse die.



• All intending subscribers must be Indian citizens.

• All subscribers should have a valid bank account. Returns are paid directly to the bank account which is also required for the auto-debit facility.

• The scheme is open only for people between 18 to 40 years of age. The monthly contribution depends upon the age of joining. But the earlier you join, the lower will be your contribution.

Tax benefits

When the scheme was first launched, there was no tax exemption on the premium paid. However, a recent circular from the income tax department has instructed that contributions to Atal Pension Yojana will have similar benefits like NPS. It means that the premium paid is eligible for deduction under section 80CCD, with the upper limit capped at Rs. 50,000.

Indicative contribution and returns

The following table illustrates the monthly contribution and the returns for each monthly pension slab:



Penalty charges

The Penalty will be charged on a subscriber’s account if the monthly premium payable is unavailable in the savings account on the due date. This could happen because of non-maintenance of the required balance in the savings account. The penalty charged in this regard is as follows:


If there is no payment made towards the scheme for six months, then the subscriber’s account will be frozen. For a 12-month and 24-month default, the account will be deactivated and then closed entirely.

Premature exit

The modified scheme allows subscribers to prematurely exit from the pension scheme before turning 60. They can now exit voluntarily but they would be returned only their part of the contribution along with the interest thereon. They won’t be entitled to the government’s contribution and the interest. Premature exit, earlier, was only allowed in exceptional circumstances like terminal illness or death.

Application form

The Atal Pension Yojana application form can be downloaded from the following link:

Atal Pension Yojana Application Form

It’s also available at your nearest bank branches. Besides English, the form is also available in 8 different Indian languages i.e. Hindi, Bangla, Gujarati, Odiya, Kannada, Tamil, Telugu, and Marathi.

• In the first part of the form, you have to fill up your bank account details like your bank name, branch, account number etc.

• In the second part, personal details including name, age, mobile phone number, Aadhaar card number, email (if any) are to be mentioned, along with whether you are married or not. For married individuals, the name of the spouse and his/her Aadhaar card details are mandatory. Nominee is also required in this part of the Atal Pension Yojana account. The applicant has to mention whether he/she is already a member of any social security scheme and a taxpayer or not.

• The applicant, in the third part, has to fill up the amount of pension he/she wants to get. As already said, there are five options from Rs. 1,000 to Rs. 5,000.

• The applicant has to sign at the bottom of the form and also mention the date.

• The bank will issue an acknowledgement slip upon successful submission of the form.

• Besides private sector and nationalised banks, and other aggregators and points of presence i.e. service providers, the government is expected to extend the APY scheme to the farthest corners of the country through post offices shortly.

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1. Is it mandatory to have a nominee for your Atal Pension Yojana account?

Yes, it’s compulsory to name a nominee at the time of opening your APY account. Details of your spouse, if any, are also mandatory along with his/her Aadhaar card details, wherever applicable.

2. Can I have more than one APY account?

No. One person can open only one APY account.

Also read: Sukanya Samriddhi Yojana: Empowering India’s Daughters

Should you Invest?

This scheme is only suitable for people working in unorganised sector without any social security benefits, the return on investment at retirement works out to around 7.35% Per Anum. A PPF would certainly be a better option to accumulate your retirement corpus than APY.


This article should not be construed as investment advice, please consult your Investment Adviser before making any investment decision.

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4 thoughts on “Atal Pension Yojana: A Complete Guide”

  1. Shridhar.N Vishwakarma

    I am an IT employee and investing in EPF & PPF.. Can I open APY account and start investing.

    1. Dear Shridhar
      There is no restriction for you to open a APY account, but it is not recommended for you, the maximum pension under this scheme is 5000, Instead you can look at mutual funds to accumulate our retirement corpus.

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