Financial Inclusion and Retirement Planning: A Scenario Analysis of the Feasibility of Atal Pension Yojana

Background: Financial inclusion, crucial for economic development, has gained global attention, particularly in emerging economies like India where initiatives to improve access to financial services are vital. Objective: This study aims to assess the feasibility and potential impact of the Atal Pension Yojana (APY) on retirement planning within India’s unorganised sector through scenario analysis. Methodology: Utilising secondary data, the study analyses the present and future values of contributions and pension benefits under various scenarios, focusing on different starting ages and pension amounts. Findings: The analysis suggests that, at higher interest rates, the present value of pension benefits from APY may fall short of contributions, indicating potential shortcomings in fulfilling retirement needs. However, younger subscribers could benefit under certain conditions, emphasising the importance of early enrolment. Implications: The research highlights concerns regarding the effectiveness of APY in addressing retirement needs, suggesting the need for additional government support to enhance the scheme’s attractiveness and financial feasibility. Originality: This study offers a multidimensional exploration of financial inclusion and retirement planning within the framework of APY, contributing to the literature on this topic, especially in economies with informal labour markets and limited social security mechanisms.