The Cabinet’s extension of Atal Pension Yojana highlights its role in securing unorganised workforce, with strong enrolment and women’s participation. However, inflation risks, low awareness, and irregular contributions persist. Reforms like inflation-indexing, financial literacy, and auto-enrolment are vital to make APY a durable pillar of social justice.
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The Union Cabinet has approved the continuation of the Atal Pension Yojana (APY) up to the financial year 2030-31.
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Read all about: Atal Pension Yojana |
It is a voluntary, government-backed social security scheme launched in 2015, to provide old-age income security to all citizens, with a special focus on workers in the unorganised sector.
It is aCentral Sector Scheme scheme, administered by the Pension Fund Regulatory and Development Authority (PFRDA).
As of January 2026, the scheme has enrolled over 8.66 crore subscribers. (Source: DD News)
Eligibility
Any Indian citizen between the ages of 18 and 40 years with a savings bank or post office account. Subscribers must not be income-tax payers.
Guaranteed Pension
Offers a fixed minimum monthly pension of ₹1,000, ₹2,000, ₹3,000, ₹4,000, or ₹5,000 upon attaining the age of 60.
Contribution
The monthly contribution amount is based on the subscriber's entry age and the selected pension amount. It is designed to be affordable for low-income groups.
Government Co-contribution
The government co-contributed 50% of the subscriber's contribution or ₹1,000 per annum (whichever is lower) for 5 years for those who joined between June 2015 and March 2016 and were not part of any other statutory social security scheme.
Benefits on Death
What is the Constitutional and Legal Basis for Social Security?Directive Principles of State Policy (DPSP): Article 41 of the Constitution directs the State to "make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement". APY is a direct policy instrument to fulfil this mandate. Fundamental Rights: The Supreme Court has interpreted the Right to Life under Article 21 to include the right to live with dignity. This includes the right to livelihood and social security, making it an enforceable right. |
Addressing Old-Age Income Insecurity
The APY offers a vital safety net for the unorganised sector, where many people lack formal pension coverage. It guarantees informal workers a regular income flow following their retirement.
Promoting Financial Inclusion
By linking pension contributions to bank accounts, APY has successfully integrated millions of unorganised sector workers into the formal banking system.
Empowering Women
Women constitute 48% of the total subscribers, highlighting the scheme's role in promoting their long-term financial security. (Source: Lok Sabha data)
Inadequacy of Pension Amount: The fixed pension slabs (₹1,000 - ₹5,000) are not indexed to inflation. Over time, the real value of the pension erodes, making it insufficient to cover living costs.
Low Awareness and Financial Literacy: Though enrolment is high, many in the target demographic, particularly in rural areas, are still uninformed about the scheme or its benefits.
Contribution Irregularity: Fluctuating income of many informal workers makes it difficult to maintain regular monthly contributions, leading to dormant accounts.
Systemic Gaps in Pension Coverage: According to the 2025 Mercer CFA Institute Global Pension Index, India ranked last (52nd out of 52 countries) with an overall score of 43.8 and a "D" grade.
Introduce Inflation-Indexing: Linking pension slabs and contributions to inflation to ensure long-term adequacy and protects purchasing power.
Enhance Financial Literacy: Intensify awareness campaigns using digital platforms, Self-Help Groups (SHGs), and banking correspondents to improve outreach and understanding of the scheme's benefits.
Leverage Technology for Flexibility: Use the Jan Dhan-Aadhaar-Mobile (JAM) trinity to allow for flexible contribution schedules, accommodating the seasonal and irregular income patterns of informal workers.
Explore Auto-Enrolment: Develop an 'opt-out' based auto-enrolment model for specific segments like gig and platform workers, under the framework of the Code on Social Security, 2020.
Increase Pension Slabs: A periodic review and enhancement of the maximum pension amount beyond ₹5,000 are necessary to align with future living costs.
The Atal Pension Yojana is a vital social security scheme for the unorganised sector, but to be truly transformative and provide a dignified retired life, it must address structural challenges like the lack of inflation indexing through key reforms.
Source: PIB
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PRACTICE QUESTION Q. With reference to the Atal Pension Yojana (APY), consider the following statements: 1. It is a mandatory pension scheme for all unorganised sector workers. 2. The scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA). 3. Both income-tax payers and non-tax payers between the ages of 18 and 40 are eligible to join. Which of the statements given above is/are correct? (a) 1 and 3 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3 Answer: (b) Explanation: Statement 1 is incorrect: The APY is a voluntary, contributory pension scheme, not mandatory. It is primarily targeted at unorganised sector workers, but joining is a choice. Statement 2 is correct: The Atal Pension Yojana (APY) is administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the overall institutional architecture of the National Pension System (NPS). Statement 3 is incorrect: While individuals aged between 18 and 40 are eligible, there is a restriction regarding tax status. With effect from October 1, 2022, any citizen who is an income-tax payer is not eligible to join the APY scheme. Therefore, the statement that "both income-tax payers and non-tax payers" are eligible is incorrect. |
APY is a voluntary, government-backed pension scheme launched in 2015, primarily targeting workers in the unorganised sector. It aims to provide a guaranteed minimum monthly pension of ₹1,000 to ₹5,000 after the subscriber reaches the age of 60.
Any Indian citizen between the ages of 18 and 40, who has a bank or post office account and is not an income-tax payer, is eligible to join the scheme.
Social security is rooted in the Constitution through the Directive Principles of State Policy (DPSP), particularly Article 41, which calls for public assistance in old age. The Supreme Court has also interpreted the Right to Life with dignity under Article 21 to include social security.
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