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Atal Pension Yojana- What does the scheme comprise of?

Atal Pension Yojana

The Atal Pension Yojana came into effect as a replacement for Swavalamban Yojana, which didn’t collect many applications because it didn’t guarantee pension benefits at the age of 60. In this article, we shall look at the entire scheme of APY.

What is Atal Pension Yojana (APY)?

It is a government-run pension scheme that offers pension benefits to all citizens of India, and its main focus is on the unorganized sector. The APY is administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the National Pension System.

This scheme provides a guaranteed minimum monthly pension between 1000 rupees to 5000 rupees for the beneficiaries. The subscribers may choose a monthly pension, which can be 1000, 2000, 3000, 4000, or 5000 rupees on attaining 60 years of age.

It may be noted that the amount of pension received by an individual is directly related to the age at which he/she has joined APY and the monthly amount that is contributed.

What is the objective of this scheme?

The APY scheme focuses on providing benefits to the unorganized sectors such as house help, gardeners, etc. It seeks to provide security and protection to citizens from accidents, illnesses, or diseases.

What are the eligibility criteria for Atal Pension Yojana?

An individual applying under this scheme must fulfill the following eligibility criteria:

Atal Pension Yojana
  • The individual applying for this scheme must be between the age of 18 to 40 years;
  • The individual applying for this scheme must contribute for at least 20 years; and
  • The applicant should have a savings bank account linked with a registered mobile number and Aadhaar number.

Note: The individual enrolled under Swavalamban Yojana shall be migrated automatically under the APY scheme.

Key features of the Scheme

Some of the key features of the scheme include the following:

  • All Indian citizens can avail subscription between the age group of 18 to 40 years;
  • On attaining 60 years by the subscriber, the pension will commence;
  •  The amount of pension can be selected as 1000, 2000, 3000, 4000 or 5000 rupees. Contribution amounts shall be calculated accordingly;
  • Under this scheme bank account is necessary and deposit amount will be auto-debited from the account periodically; and
  • Contributions made to the APY will be eligible for tax deduction under Section 80CCD.

How can one open APY account?

The following points may be known to open an APY account:

  • Fill the APY registration form and submit it to your local bank branch.
  • Give your bank account number, Aadhaar, and mobile number.
  • Your first contribution amount shall be debited from your linked bank account when the APY account is opened.
  • Your bank will issue acknowledgment no. /PRAN no. to you.
  • Subsequent contributions shall be deducted automatically from your bank account.

What are the penalties under the Atal Pension Yojana?

Under the scheme, the individual subscribers can be penalized for delayed contribution to the pension scheme. Banks will collect the additional amount for such delayed payments.

If you do not keep adequate account balance, then the following penalty can be charged:

  • In case where contribution per month is up to 100 rupees then 1 rupee penalty will be charged;
  • In case where contribution per month is between 101 to 500 rupees then 2 rupee penalty will be charged;
  • In case where contribution per month is between 501 to 1000 rupees, then 5 rupees penalty will be charged; and
  • In case where contribution per month is more than 1001 rupees, then 10 rupees penalty will be charged.

What happens if you fail to make regular contributions to this pension scheme?

 In case of failure to make payments of contribution amount will lead to the following:

  1. The APY account will be frozen after six months of non-payment;
  2. The APY account will be deactivated after 12 months of non-payment; and
  3. The APY account will be closed after 24 months of non-payment.

Note: It is noteworthy to mention here that periodical mobile alerts are sent to APY subscribers by banks to prevent late payment.

What are the benefits of this scheme?

The Atal Pension Yojana provides a wide range of benefits to its subscribers, and these are mentioned below:

Atal Pension Yojana
  • Low-risk retirement option as benefits are guaranteed by the Government of India;
  • Contributions to this scheme qualify for tax benefits under Section 80 CCD (1) of the Income Tax Act, 1961;
  • It is easier to subscribe for Indian residents whether self-employed or salaried;
  • APY accepts subscription from even those who contribute to other private/ government-backed pension schemes;
  • Where the APY subscriber dies, guaranteed benefits for spouse/ nominee/ next of kin according to the applicable rules;
  • The subscriber has the flexibility to choose from monthly, quarterly or half-yearly basis; and
  • Another essential benefit in APY is that the government will co-contribute 50% of the total contribution or 1000 rupees per annum, whichever is lower to the APY account holders who join the scheme during June 1, 2015, to December, 31st, 2015. The co-contribution from the government shall be provided for five years from FY 2015-16 to 2019-20.

How to draw a pension from Atal Pension Yojana?

Upon the completion of the contribution term and on attaining the age of 60, you can contact your bank or post office where you enrolled under this scheme. Submit a request to the associated bank for drawing the guaranteed monthly pension.

Where the subscriber dies after attaining 60 years, the pension amount will be paid to their spouse. In case both subscriber and spouse die, the accumulated pension corpus shall be given to the nominee.  


Atal Pension Yojana doesn’t allow exiting the scheme before attaining 60 years of age of the subscriber. However, under exceptional cases like terminal illness or death of the subscriber, it is allowed. It may be noted that in case of death of the subscriber, the spouse can continue to make contributions in the scheme. 

Read our article:What is the Procedure of PF Balance Check

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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