Policy Update
Angela Rajeev
Background
The Atal Pension Yojana (APY) was introduced in 2015 as a voluntary pension scheme to address a pressing gap in India’s social security system. It was originally launched as the Swavalamban Yojana under the UPA government before being relaunched and renamed Atal Pension Yojana in 2015 and thus, giving the scheme a stronger and wider reach. This shift was necessary because most Indian workers exist outside formal employment. As a result, they do not receive employer-linked pension benefits, which leaves them with limited financial security after retirement. To address this, Atal Pension Yojana was designed to encourage retirement savings among this segment in order for subscribers to become entitled to a guaranteed monthly pension once they turn sixty.
The scheme was announced in the Union Budget of 2015-16 and further was enforced by June 2015. It is executed by the Pension Fund Regulatory & Development Authority (PFRDA, 2026). Indians between eighteen and forty with a savings bank or post office savings account can subscribe to this scheme. They can select an assured monthly pension ( ₹1000 / ₹2000 / ₹3000 / ₹4000 / ₹5000 ). The required contribution depends on their age at the time of joining along with the pension amount of their choice (PFRDA, 2026).
A set of amendments were introduced in 2016 that were made to give greater flexibility to the spouse of a subscriber in case the subscriber dies before sixty and Aadhaar was later integrated into the enrolment process. Moreover in 2022, it was held that the individuals falling under the income tax bracket were no longer eligible to enroll in Atal Pension Yojana. However, existing subscribers were allowed to continue their accounts (PFRDA, 2026).
Functioning
Atal Pension Yojana operates through a contributory model. Subscribers make regular contributions on a monthly / quarterly / half-yearly basis until the age of 60. The amount depends on the subscriber’s age when joining and the pension slab selected. At 60, the subscriber receives the guaranteed pension for life and with the subscriber’s death, the same pension is payable to the spouse. Following the death of both subscriber and spouse, the accumulated pension wealth is returned to the nominee (PFRDA, 2025).
The institutional structure is decentralised. PFRDA administers and regulates the scheme, while banks and the Department of Posts act as the main distribution and servicing channels. Public sector, private, rural and cooperative banks participate through the APY Points of Presence framework (Ministry of Finance, 2025).
This structure allows APY to use India’s existing banking and financial inclusion network rather than creating a separate delivery system. PFRDA and participating institutions also conduct awareness campaigns, training programmes and outreach activities through State Level Bankers’ Committees, Lead District Managers and other stakeholders (Ministry of Finance, 2025).
The Government also provides financial support for specific components of APY. The Union Budget 2026-27 continues provisions for government co-contribution, incentives to APY service providers and promotional campaigns (Government of India, 2026).
Table 1: How APY Works
| Component | Provision |
| Age at entry | 18-40 years |
| Pension begins | At 60 years |
| Guaranteed pension | ₹1,000-₹5,000 per month |
| Contribution frequency | Monthly/quarterly/half-yearly |
| Main delivery channels | Banks and Department of Posts |
| Administrator | PFRDA |
| Spouse benefit | Same pension after subscriber’s death |
| Nominee benefit | Pension wealth after death of subscriber and spouse |
| Income-tax payer eligibility | New subscribers excluded from 1 October 2022 |
Source: PFRDA (2026)
Performance
APY’s strongest performance indicator is its rapid expansion in terms of enrollment. The scheme had over seven crore gross enrolments by March 2025. The expansion accelerated further in FY 2025-26, with gross enrolments exceeding nine crore in April 2026. Pension Fund Regulatory and Development Authority has driven tech-friendly awareness for APY through e-APY onboarding, net-banking and mobile app access. Moreover, it has developed a dedicated Help Desk and Chatbots that has linked subscribers to services and information available (PFRDA, 2025).
Chart 1: APY Gross Enrolments, 2022-23 to 2025-26 ( Source: PIB)
A second important performance indicator is the composition of subscribers. Women accounted for approximately 55% of new APY enrolments in FY 2024-25 which is indicating growing participation by women in formal retirement saving mechanisms (PFRDA, 2025). Infact by October 2025, women accounted for 48% of total gross enrolments (around 4.04 crore subscribers) (Ministry of Finance, 2025).
However, the distribution across pension slabs raises a more important question about adequacy. As of 30 November 2025, 86 % of pension seekers had selected the ₹1,000 monthly pension slab. Only 8% had selected the ₹5000 slab (Ministry of Finance, 2025).
Table 2: Distribution of APY Subscribers and Pension Slabs
| Guaranteed Pension | Subscribers | Share |
| ₹1,000 | 7,34,79,553 | 86.91% |
| ₹2,000 | 25,34,949 | 3.00% |
| ₹3,000 | 11,86,898 | 1.41% |
| ₹4,000 | 4,46,102 | 0.53% |
| ₹5,000 | 68,69,917 | 8.15% |
| Total | 8,45,17,419 | 100% |
Source: Ministry of Finance (2025).
The figures show both the reach of APY and its concentration at the lowest pension level. The high share of ₹1,000 plans may indicate that the scheme is successfully reaching lower-income subscribers because the contribution burden is lower. At the same time, it raises questions about whether the eventual pension will provide meaningful income security in old age.
Impact
Atal Pension Yojana is a voluntary contributory scheme, meaning that the subscriber must continue making contributions over a long period. This creates a particular challenge for workers whose incomes are irregular or seasonal. The adequacy of the guaranteed pension is another concern. The ₹5,000 maximum pension was designed when the scheme was introduced in 2015 and has not been increased. The Government stated in December 2025 that the existing pension slabs would continue without further increase, partly because a higher pension would also substantially increase subscriber contributions (Ministry of Finance, 2025).
This creates a tension within the scheme. Increasing the pension could make APY more relevant to future retirees, but higher contributions could make participation harder for precisely the low-income workers the scheme is intended to serve. Recent evidence also suggests that awareness and regular contribution remain important challenges among informal workers. NITI Aayog has noted that informal workers can have low APY enrolment because of limited awareness and difficulties in contributing regularly (NITI Aayog, 2025). Therefore, APY’s first decade can be described as a strong expansion of pension coverage, but not yet as proof that adequate old-age income security has been achieved.
Emerging Issues
The maximum guaranteed pension remains ₹5,000 per month. With retirement benefits generally beginning decades after enrolment, inflation can significantly reduce the real value of the guaranteed amount (Ministry of Finance, 2025). Enrolment alone does not guarantee future pension benefits, and subscribers must continue contributing. PFRDA has therefore increasingly emphasised persistency alongside new enrolments in its targets for banks and other service providers (PFRDA, 2025).
More than 86% of subscribers were enrolled in the ₹1,000 pension slab as of November 2025 (Ministry of Finance, 2025). This makes the adequacy of the lowest pension an important policy question. Workers in the informal economy may struggle to maintain regular contributions because income is often unstable. This can limit the effectiveness of a voluntary contributory model for the most financially vulnerable workers (NITI Aayog, 2025).
Excluding current and former income-tax payers has sharpened APY’s focus on lower-income groups, but it also means the scheme is no longer available to some workers whose incomes may remain modest but who have entered the tax system (PFRDA, 2022).
Way Forward
The next stage of evaluation should move beyond gross enrolment numbers towards measures such as contribution regularity, account retention, exits and eventual pension payouts.
Firstly, Atal Pension Yojana should periodically review its pension slabs against inflation and changes in the cost of living. The objective should not simply be to increase the maximum pension, but to ensure that the guaranteed amount retains meaningful purchasing power when subscribers reach 60.
Second, policy monitoring should give greater weight to persistency. PFRDA and participating institutions should publish clearer information on active accounts, contribution regularity and dropout rates alongside gross enrolment figures.
Third, outreach should focus more closely on workers with irregular incomes. Financial literacy campaigns can be combined with local institutions such as self-help groups, worker associations, post offices, cooperatives and digital platforms to explain contribution options and the long-term implications of different pension slabs.
Fourth, women’s participation should be consolidated. The high share of women among recent enrolments provides an opportunity to connect APY with broader financial inclusion initiatives and improve independent retirement security for women.
Finally, APY should be assessed as part of India’s wider social protection system rather than in isolation. Its role should be clearly distinguished from NPS, EPFO, state pension schemes and non-contributory social assistance. A more integrated pension architecture would help policymakers identify which groups remain uncovered and which groups require a guaranteed social pension rather than a contributory product.
The first decade of APY therefore represents a significant expansion in India’s pension system. The next decade of Atal Pension Yojana will depend less on how many accounts are opened and moreover whether these accounts remain active long enough to ultimately provide adequate income security in old age. This remains a crucial test for India’s social security future.
References
Department of Financial Services. (2026). Atal Pension Yojana (APY). Ministry of Finance, Government of India. https://financialservices.gov.in/atal-pension-yojana-apy
Ministry of Finance. (2025, June). Atal Pension Yojana reaches poorest of the poor with majority enrolments in lower pension slab [Press release]. Press Information Bureau, Government of India. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2204271&lang=2®=48
Ministry of Finance. (2026, April 21). Atal Pension Yojana crosses historic milestone: Total gross enrolments surpass 9 crore [Press release]. Press Information Bureau, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2254487&lang=2®=48
NITI Aayog. (2025). AI for inclusive societal development. Government of India. https://www.niti.gov.in/node/1994
Pension Fund Regulatory and Development Authority. (2025). Atal Pension Yojana registers 1.17 crore new enrolments in 2024-25 [Press release]. https://www.pfrda.org.in/documents/33652/86710/APY%2BREGISTERS%2B1.17%2BCRORE%2BNEW%2BEnrolments%2Bin%2B2024-25.pdf
Pension Fund Regulatory and Development Authority. (2025). Annual report 2024-25. https://www.pfrda.org.in/en/web/pfrda/w/annual-report-2024-25-
Pension Fund Regulatory and Development Authority. (2026). Atal Pension Yojana. https://pfrda.org.in/web/pfrda/schemes/atal-pension-yojana-apy
Pension Fund Regulatory and Development Authority. (2026). Atal Pension Yojana FAQs. https://pfrda.org.in/w/faqs/atal-pension-yojana
Government of India. (2026). Outcome budget 2026-27. Ministry of Finance. https://www.indiabudget.gov.in/doc/OutcomeBudgetE2026_2027.pdf
Government of India. (2026). Notes on demands for grants 2026-27. Ministry of Finance. https://www.indiabudget.gov.in/doc/eb/allsbe.pdf\\
About the Contributor
Angela Rajeev is a graduate in Political Science and History, with a minor in Economics, from Christ University, Bangalore. She approaches her research with a passion for gender, public policy, and geopolitics. As a Research and Editorial Intern at IMPRI, she works at the intersection of policy and culture while exploring issues related to governance, society and international relations.
Acknowledgements
The author extends sincere gratitude to the IMPRI team for their guidance and support along with the reviewers Ms. Gargi Bisht and Ms. Nivedya Murali for their valuable feedback and insights.
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organization
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