Atal Pension Yojana: what it earns and what it costs

A pension you choose first and pay for second

The Atal Pension Yojana works backwards. You pick the pension you want from 60, ₹1,000, ₹2,000, ₹3,000, ₹4,000 or ₹5,000 a month, and the scheme tells you what it costs. You can join between 18 and 40, but not if you are or have been an income-tax payer, a bar in force since 1 October 2022. The government guarantees the pension; after your death it continues to your spouse, and after both, the nominee receives a corpus of ₹1.7 lakh for every ₹1,000 of monthly pension. Our guide to how APY works covers the design.

That leaves two questions this post answers with numbers: what the guarantee costs at each joining age, and what the money behind it has actually earned.

What the guarantee costs, by joining age

Monthly contribution by guaranteed monthly pension, from PFRDA's contribution chart as used in our APY calculator, which has every age from 18 to 40. The figures are indicative and the government can revise them.

Waiting is expensive. Joining at 40 instead of 18 costs 6.9 times as much a month for the same pension, and 3.3 times as much in total, even though you pay for 20 years instead of 42. After 30 the price rises by 9% to 10% for every year you wait: the ₹5,000 pension costs ₹577 a month at 30, ₹902 at 35 and ₹1,454 at 40. It is the cost of delay with the price written down.

The return built into the chart

The chart is not arbitrary. Take the monthly contribution at any joining age and ask what return turns it into the corpus the nominee would receive at 60, ₹8.5 lakh for the ₹5,000 pension. The answer is about 8.2% a year at every age in the table, from 8.16% to 8.21% (assuming each payment is made at the start of the month). ₹210 a month from 18 compounds to ₹8.5 lakh at that rate; so does ₹1,454 a month from 40.

The pension then pays ₹60,000 a year on that ₹8.5 lakh, or 7.06% of it, for two lives, with the corpus returned at the end. That is the promise the government guarantees. Whether it costs the government anything depends on what the money actually earns.

What the APY fund has earned

Contributions are invested by three pension funds, SBI, UTI and LIC, in a separate APY scheme each. From NPS Trust's NAVs to its latest NAV date, 8 October 2026:

Periods of a year or more are annualised, computed as on our NPS returns page. ₹10 at launch in May 2015 is now ₹23.98 to ₹24.65.

Since launch the fund has roughly matched the chart; lately it has not. Its return since May 2015 is 8.00% to 8.27% a year, close to the 8.2% the chart implies. Over ten years it is about 7.5%, and over five about 6%. A subscriber does not bear that gap: if the fund earns less than the guarantee needs, the government makes up the difference, and if it earns more, subscribers can receive more.

It invests like the government employees' default. The APY scheme's ten-year returns, 7.49% to 7.53%, sit almost exactly on those of the same managers' Central Government scheme, 7.46% to 7.54%. A statistical fit of its daily NAV moves over the last three years against each manager's Scheme E, C and G explains 96% to 98% of them with weights of roughly 16% to 17% in equity, 25% to 30% in corporate bonds and 48% to 54% in government bonds. That is an estimate from prices, not a disclosed allocation; our post on the government NPS schemes uses the same method.

It is steady, not immune. Its deepest fall, 5.77% to 6.39%, came in February and March 2020. Every full calendar year from 2016 to 2025 ended higher; 2026 so far is down 1.03% to 1.48%.

NPS Trust also lists a separate APY Fund scheme for the same three managers, with NAVs from March 2023, which has returned 6.43% to 6.78% a year over three years; see UTI's.

What the guarantee does not cover

Inflation. The pension is fixed in rupees for life. At an assumed 6% a year, ₹5,000 paid 42 years from now buys what about ₹433 buys today; paid 20 years from now, about ₹1,559. The inflation calculator runs other rates, and how inflation eats your savings explains the mechanism.

Size. ₹5,000 a month is the ceiling. A larger pension needs another product, such as the NPS, whose returns are not guaranteed; the NPS calculator projects one at a rate you choose.

Leaving early. A voluntary exit before 60 returns only your own contributions and the interest actually earned on them, less charges, without the guarantee. You can move up or down a pension tier once a financial year, paying or receiving the difference.

How to use this

For someone outside the formal sector with no EPF and no employer pension, APY sells a small, guaranteed, two-life pension at a price that is lowest at 18. For anyone who is or has been an income-tax payer, it is closed anyway. The retirement calculator shows how far ₹5,000 a month would go against your own needs.

Contribution rates and eligibility are set by PFRDA and the government and have changed before; check the current chart with your bank or PFRDA before you enrol. Past returns of the APY fund do not predict future ones, and none of this is a recommendation.