Those who want to invest for a fixed pension during their retirement, the guaranteed pension scheme of the government Atal Pension Yojana (APY) is an attractive option.

The pension scheme was launched by the Central Government to provide income security in the old age to people in the unorganized sector.

APY scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) and is available to people aged 18 to 40 years.

The APY is a deferred pension scheme which means that one needs to keep contributing regularly till age 60 and, thereafter, a fixed amount of monthly pension will begin.

This social security scheme was launched to provide them with a defined pension between Rs 1,000 to Rs 5,000, depending on the contribution and its period.

The scheme is open to all Indians aged 18-40 years.

APY subscribers have an option to make the contribution on a monthly, quarterly or half-yearly basis.

Earlier, only monthly contribution option was available.

The pension amount is a fixed amount that the subscriber is assured to receive from age of 60.

However, the returns generated by the government may vary.

As per the rules, if the accumulated corpus based on contributions earns a lower than estimated return and is inadequate to provide the minimum guaranteed pension, the Central Government would fund such inadequacy.

Alternatively, if the actual returns are higher than the assumed returns for minimum guaranteed pension, the excess will be passed on to the subscriber.

Investment in APY is eligible for deduction under section 80CCD (1) of the Income-tax Act, 1961.

The maximum amount that can be deducted from taxable income under this scheme is Rs two lakh in the financial year.

Also, the combined deduction under Section 80C and Section 80CCD cannot exceed Rs two lakh.

In order to get a fixed monthly pension between Rs 1,000 and Rs 5,000 per month, the subscriber has to contribute between Rs 42 and Rs 210 per month if they are joining at the age of 18 years.

On the other hand, if the subscriber joins at the age of 40 years, the contribution ranges between Rs 291 and Rs 1,454 per month, for the same fixed pension amounts.

For a minimum guaranteed pension of Rs 3,000 per month, the monthly contribution will be range between Rs 126 and Rs 792 for entry age of 18 to 39.

The return of corpus to the nominees will be Rs 5.1 lakh, irrespective of the entry age.

For a minimum guaranteed pension of Rs 4,000 per month, the monthly contribution will be range between Rs 168 and Rs 1054 for entry age of 18 to 39.

The return of corpus to the nominees will be Rs 6.8 lakh, irrespective of the entry age.

For a minimum guaranteed pension of Rs 5000 per month, the monthly contribution will be range between Rs 210 and Rs 1318 for entry age of 18 to 39.

The return of corpus to the nominees will be Rs 8.5 lakh, irrespective of the entry age.