What is APY?
APY, or Atal Pension Yojana, is a government-backed pension scheme regulated by the PFRDA. It is meant mainly for workers in the unorganised sector who don’t have a pension from their employer.
You pay a fixed amount every month from the age you join until you turn 60. From 60, you receive a guaranteed monthly pension of ₹1,000, ₹2,000, ₹3,000, ₹4,000 or ₹5,000 for life, depending on the plan you choose.
After your death, your spouse receives the same pension for life. After both of you, the money you built up is paid to your nominee.
Good to know
Any Indian citizen aged 18 to 40 with a savings bank or post office account can join. Since October 2022, people who pay income tax can no longer join APY.
What is an APY Calculator?
An APY calculator shows how much you need to pay every month for the pension you want, how many years you will pay for, and how much you will contribute in total.
The contribution comes straight from the official PFRDA chart. It depends only on your age when you join and the pension you choose; the younger you join, the less you pay.
Why you should use an APY Calculator?
- Know your monthly cost: See exactly how much will be deducted from your bank account every month.
- Choose the right pension: Compare the cost of each pension amount to pick one that fits your budget.
- See the value of joining early: Change your joining age to see how much less you pay by starting sooner.
How Does an APY Calculator Work?
The APY calculator works on the following inputs:
- Your Joining Age: Your age when you join, from 18 to 40.
- Desired Monthly Pension: The pension you want from 60: ₹1,000, ₹2,000, ₹3,000, ₹4,000 or ₹5,000.
The monthly contribution is read from the PFRDA chart for your age and pension. The duration is the number of years until you turn 60, and the total is the monthly contribution × 12 × the duration.
Total Amount = Monthly Contribution × 12 × (60 − Joining Age)
Calculating APY with an Example
Consider an example for a better understanding.
- Joining Age: 28 years
- Desired Monthly Pension: ₹2,000
From the chart, the monthly contribution is ₹194. You pay it for 32 years, until you turn 60:
Total Amount = 194 × 12 × 32 = ₹74,496
From 60, you receive ₹2,000 every month for life. After you and your spouse, your nominee receives ₹3,40,000.
Things to keep in mind
- Auto-debit: Contributions are deducted from your bank account automatically. Keep enough balance, as missed payments attract a small penalty.
- Change your pension: You can increase or decrease your pension amount once a year, and your contribution changes to match.
- Pay less often: Instead of monthly, you can choose to pay every quarter or every six months.
- Tax benefit: Contributions qualify for a deduction under Section 80CCD in the old tax regime, like NPS.