New Delhi: India is looking to strengthen the social safety net for informal workers amid rising living costs for retirees. Under the plan, the finance ministry, in consultation with the Pension Fund Regulatory and Development Authority (PFRDA), is considering doubling the assured pension ceiling under the flagship Atal Pension Yojana (APY) to ₹10,000 a month, according to three people familiar with the discussions.
The proposal aims to boost new sign-ups and retention in the system, which now has 90 million subscribers but faces high attrition.
Launched in May 2015, the pension scheme targets workers in the informal sector and currently provides a guaranteed monthly pension of ₹1,000-5,000 after 60 years, depending on the amount of the subscriber’s contribution.
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With nearly half of registered subscribers having stopped paying contributions over time, the government is exploring a long-pending demand to raise the pension cap to ₹10,000 per month to make the scheme more attractive and in line with the rising cost of living, according to the people cited above.
Gross registrations for this program exceeded 13.5 million in FY26, the highest ever in a single fiscal year since its inception.
“The government and PFRDA are exploring options to increase the upper limit of pension to approx ₹8,000– ₹10,000 per month to make the scheme more attractive and in line with the rising cost of living,” said one of the people quoted above, requesting anonymity.
Co-post
According to the structure of the program, the government provided a co-contribution in the first years for subscribers registered before March 31, 2016. This support amounted to 50% of the subscriber’s contribution, the maximum amount ₹1,000 per annum and was available for five years from FY16 to FY20. The benefit was limited to subscribers who were not income tax payers and were not covered by any other social security scheme.
The second person above said that the proposed revision is expected to improve long-term retention, which is a key challenge. While the reach of the scheme has been strong, continuity of contribution is an issue due to income fluctuations among workers in the informal sector.
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The government is also looking at increasing last-mile enrollment through “pension sakhs” along with business correspondents (BCs) while addressing structural issues like continuity of contributions, a third person familiar said. “The proposed pension increase is positioned not only as an incentive for new enrollments, but also as a lever to improve persistence and deepen financial security within APY,” the person said.
On 21 January 2026, the Union Government approved the continuation of the program till FY31 along with extension of financial support for promotion, development and gap funding.
Emailed queries to finance ministry and PFRDA spokespersons late on Tuesday remained unanswered till press time.
No significant load
Experts said any increase in the pension cap is unlikely to put a significant strain on the government’s finances as the Atal scheme is largely funded by participants.
“APY is in the nature of a defined contribution plan with a minimum defined benefit linked to the pension chosen by the participant. Contribution amounts are invested by pension fund managers with a conservative asset allocation where safety remains the primary objective of retirement savings,” said Vivek Iyer, Partner, Grant Thornton Bharat. “Given this structure, we don’t see a significant fiscal impact because the system is largely funded by participants.”
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Iyer added that the final numbers need to be reviewed “for a clearer assessment”.
Rahul Singh, associate professor at OP Jindal Global University, said the scheme has made a strong impact but faces sustainability issues due to irregular income in the informal sector. “Increasing pension caps can improve adequacy and attractiveness, align benefits with the rising cost of living and encourage better long-term participation alongside ongoing awareness and inclusion efforts,” he said.
