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India is a developing country with a large workforce. Every year millions of people enter the workforce, however, there are limited opportunities in the organised sector, which has led to a situation where a bulk of people work in the unorganised sector. There is a lack of consensus on the exact number of people working outside the organised sector, but different government bodies estimate the share of people employed in the unorganised sector ranges anywhere from 85% to 93% of the total workforce. Workers in the unorganised sector do not have a security net like provident fund, which leaves them vulnerable in old age.

The government has been taking several steps to increase the social security net in the country. The National Pension Scheme after being exclusively available to government employees in the initial phase was opened to all later. However, the Pradhan Mantri Pension Yojana remains the government’s flagship scheme to help workers live a stable life in old age.

What is the Pradhan Mantri Pension Yojana?

The Pradhan Mantri Pension Yojana, also known as the Atal Pension Yojana, is a government-backed scheme aimed at providing pension benefits to the people working in the unorganised sector of the country. The Pradhan Mantri Pension Yojana is the successor of the Swavalamban Yojana, which was also targeted at the workforce in the unorganised sector, but didn’t gain traction primarily due to a lack of guaranteed pension benefits at 60. The Swavalamban Yojana was later replaced by the Pradhan Mantri Pension Yojana, which guarantees a pension of up to Rs. 5,000 per month to every subscribing worker after the age of 60. The scheme is open to all workers below the age of 40.

Benefits of the Pradhan Mantri Pension Yojana

The Pradhan Mantri Pension Yojana is aimed at helping the most vulnerable segment of the society, however, one should not assume that only unorganised workers can participate in the scheme. The scheme is open to everyone and can act as a suitable option for senior citizen social security. There are various benefits offered by the Atal Pension Yojana.

Simplicity: Unlike its predecessor, the Pradhan Mantri Pension Yojana is a simple, structured scheme which can be easily understood by everyone. It guarantees up to Rs. 5,000 per month, to every subscriber after the age of 60. Workers can get Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000 or Rs. 5,000 per month depending on the amount of contribution made by the subscriber.

Basic eligibility: To provide senior citizen social security to a large population, the eligibility criteria to join the Pradhan Mantri Pension Yojana has been kept low. One just needs a savings bank account with registered mobile number and Aadhar card number. Along with a savings account, the subscriber needs to be between 18 years and 40 years of age and has to contribute to the scheme for a minimum of 20 years.

Death benefits: In case of the death of the contributor, the benefits are provided to his/her spouse. The spouse is considered the default nominee under the Pradhan Mantri Pension Yojana. If both the contributor and the spouse die, the nominee will get the predefined corpus for the specific pension slab. In case the contributor dies before 60 years of age, the spouse is given an option to either continue the contributions or receive the contributions and the gains made on the corpus.

Tax benefits: The contributions made to Atal Pension Yojana are eligible for tax deduction under Section 80CCD of the Income Tax Act, 1961. Tax benefits of up to Rs. 50,000 can be availed under Section 80CCD (1B) of the income tax law. The deduction allowed under Section 80CCD (1B) is over Rs. 1.5 lakh allowed annually, as specified under Section 80CCE of the law.


The Pradhan Mantri Pension Yojana is a suitable option for millions of people who want a financial net in old age. However, senior citizens should also take into consideration other options along with the pension scheme. Relying on just one investment option may not be reliable. Fixed deposits offer reliable returns and are easy to understand. With RBL Bank, you can invest in fixed deposits online without even stepping out of the home. Fixed deposit investments will provide an additional financial net along with the Pradhan Mantri Pension Yojana.

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