Is joining APY at 18 for the maximum ₹5,000 pension worth it?
Joining at 18 for the maximum ₹5,000 pension requires just ₹210 per month for 42 years — a small contribution given the long vesting period — with a fixed ₹8,50,000 return of corpus and an estimated IRR of about 8.01%.
What is Atal Pension Yojana (APY)?
APY is a government-backed pension scheme for Indian citizens aged 18–40. You contribute a fixed amount (set by law based on your age and target pension, not a formula) until age 60, after which you receive a guaranteed monthly pension of ₹1,000 to ₹5,000 for life. On your death, your spouse receives the same pension; after both of you die, a fixed “return of corpus” amount is paid to your nominee.
About the IRR shown here
This estimates IRR using contributions out, your pension in from age 60, and the corpus return at an assumed age of death — the same simplified single-assumed-age approach as the deferred annuity calculator, not a full mortality-table actuarial calculation, and it does not model the spouse’s pension continuation. The contribution amount and return-of-corpus figures themselves are exact, from the official APY table — only the IRR is an estimate.
What does "IRR" mean?
IRR (Internal Rate of Return) is just the annual growth rate that would explain the numbers you put in and get out — similar in spirit to an interest rate, but for a stream of payments in and out over time rather than a single lump sum.