Planning for retirement can be difficult for people who do not have access to an employer-backed pension or a large amount of savings. To help such individuals build a regular income after retirement, the government offers pension-focused schemes such as the Atal Pension Yojana (APY) and Pradhan Mantri Shram Yogi Maandhan (PM-SYM).

Both schemes are designed to provide a monthly pension after the age of 60, but their eligibility rules, contribution structure and pension benefits are different. APY can provide a monthly pension of up to ₹5,000, while PM-SYM offers a fixed pension of ₹3,000 per month and includes an equal contribution from the central government.

So, which scheme may be more suitable? A closer look at the rules and contribution calculations can make the difference easier to understand.

What Is Atal Pension Yojana?

Atal Pension Yojana is a government-backed retirement scheme aimed at providing financial security in old age.

Eligible individuals can join the scheme between the ages of 18 and 40 years. Depending on the pension option selected and the age at which a person enters the scheme, regular contributions have to be made until the age of 60.

After reaching 60, the subscriber can receive a guaranteed monthly pension ranging from ₹1,000 to ₹5,000.

The contribution amount is not the same for every subscriber. A younger person joining the scheme generally needs to contribute less each month because there is a longer contribution period.

It is also important to note that, from October 1, 2022, a person who is or has been an income-tax payer cannot open a new APY account.

How Much Is Needed for a ₹5,000 Monthly Pension?

Consider someone who joins APY at the age of 18 and chooses the maximum pension option of ₹5,000 per month.

The required contribution is approximately ₹210 per month.

That works out to:

• Monthly contribution: ₹210
• Annual contribution: ₹2,520
• Contribution period: 42 years
• Approximate personal contribution by age 60: ₹1.06 lakh
• Pension after 60: ₹5,000 per month

This illustrates one of the advantages of joining a retirement scheme at an early age: the monthly contribution can remain relatively small because savings are spread over several decades.

What Happens to APY Benefits After the Subscriber's Death?

APY also contains provisions for the subscriber's family.

After the subscriber dies, the spouse can continue receiving the same pension amount. After the death of both the subscriber and spouse, the accumulated pension wealth linked to the chosen pension option is returned to the nominee according to the scheme rules.

This feature can be important for people who want retirement protection not only for themselves but also for their spouse.

What Is PM Shram Yogi Maandhan?

Pradhan Mantri Shram Yogi Maandhan is designed specifically for workers in the unorganised sector.

A person can generally enrol between the ages of 18 and 40 years, provided the monthly income is ₹15,000 or less and the individual meets the other eligibility conditions.

A subscriber should not be covered under schemes such as EPFO, ESIC or NPS and should not be an income-tax payer.

After reaching the age of 60, an eligible subscriber receives a fixed pension of ₹3,000 per month.

Its biggest attraction is the government's matching contribution.

Government Matches the Subscriber's Contribution

Under PM-SYM, the central government contributes the same amount as the subscriber.

For example, a person enrolling at age 18 needs to contribute approximately ₹55 per month. The government also contributes ₹55.

This means a total of ₹110 goes into the scheme each month.

If the individual continues contributing until 60:

• Subscriber's monthly contribution: ₹55
• Government contribution: ₹55
• Total monthly contribution: ₹110
• Subscriber's approximate contribution over 42 years: ₹27,720
• Government contributes a corresponding amount
• Monthly pension after age 60: ₹3,000

The contribution increases with the age at which the subscriber joins.

A person entering the scheme at age 40, for example, contributes ₹200 per month, with the government contributing another ₹200. However, the contribution period in that case is only 20 years.

APY vs PM-SYM: Key Differences

Which Scheme Looks Better at Age 30?

Suppose a person is 30 years old and wants to compare the two options.

Under APY, selecting the ₹5,000 monthly pension option would require a contribution of roughly ₹577 per month.

That comes to about ₹6,924 per year.

If the person continues contributing for 30 years until age 60, the total personal contribution would be approximately ₹2.08 lakh.

In return, the subscriber would become eligible for a pension of ₹5,000 per month after turning 60, subject to the scheme's conditions.

Now consider PM-SYM.

A person joining at age 30 needs to contribute about ₹105 per month. The government contributes another ₹105.

The subscriber therefore pays:

• ₹105 per month
• ₹1,260 per year
• Around ₹37,800 over 30 years

After reaching 60, the subscriber becomes eligible for a fixed monthly pension of ₹3,000.

The difference is clear: APY requires a higher personal contribution but can provide a higher monthly pension. PM-SYM demands a much smaller contribution from the subscriber because the government contributes an equal amount.

Which Pension Scheme Could Be More Suitable?

There is no single scheme that is automatically better for everyone.

If the priority is a higher guaranteed monthly pension and the individual meets the eligibility conditions, APY may appear more attractive because the pension can go up to ₹5,000 per month.

It also provides an important spouse benefit, as the spouse can continue receiving the same pension after the subscriber's death.

PM-SYM, however, can be particularly useful for eligible workers in the unorganised sector with limited monthly income. The government's matching contribution considerably reduces the amount that the subscriber needs to pay from personal earnings.

For a worker earning ₹15,000 or less and struggling to set aside a large retirement amount every month, that matching contribution can be a major advantage.

Check Eligibility Before Choosing

Both schemes require long-term participation, so the decision should not be based only on the headline pension amount.

Age at entry, monthly income, tax status, access to other social-security schemes, affordability of regular contributions and family requirements should all be considered.

APY may suit those who can contribute more in exchange for the possibility of a higher monthly pension. PM-SYM may be more appropriate for eligible unorganised-sector workers who want a low-cost pension arrangement supported by matching government contributions.

Starting early can also significantly reduce the monthly amount required to build retirement income.

Disclaimer: This article is intended only for general information and awareness. Eligibility, contribution and pension rules are subject to the applicable government scheme conditions. Individuals should verify the latest official rules and consider professional financial advice before making retirement or investment decisions.