NPS vs APY

Investments for retirement are crucial, and the Government offers two pension schemes for this very cause. They are - NPS and Atal Pension Yojana. Both of the schemes are different from each other, and one needs to pick a scheme based on their preference.

Although, both schemes are known to provide financial security during the retired life.

Atal Pension Yojana vs NPS - Definition

The country's central government has always been introducing effective methods and schemes to assist citizens of the country in making better financial plans for their retirement. Two such steps are the Atal Pension Yojana and NPS. 

Both of the schemes were introduced by the Indian Government. Both of the schemes offer attractive advantages to the subscribers. The National Pension Scheme was introduced before the Atal Pension Yojana. The Atal Pension Yojana was introduced in 2015, and there are a wide number of differences when we look at it as NPS vs APY. 

The National Pension Scheme was introduced in order to cover each individual, and the Atal Pension Yojana was introduced with the retirement of unorganized sectors in mind. 

What is the National Pension Scheme?

The National Pension Scheme (NPS) is a long-term investment plan initiated by the Government. It is administered by the Pension Fund Regulatory and Development Authority and is available to employees from the public, private, and unorganized sectors.

The program requires investors to contribute to a pension account during the course of their employment. Employees can take a share of the corpus after retirement. The remaining sum will be paid to the employee as a monthly pension. It gives consumers with a low-risk tolerance the opportunity to invest in a safe instrument. This could have a significant impact on people's lives after they retire.

What is the Atal Pension Yojana?

The Atal Pension Yojana was implemented to give a pension program to the unorganized sector. The scheme's primary goal is to protect Indian citizens from illness, accidents, and other calamities. The amount collected under the pension program is to be managed by the Pension Fund Regulatory Authority of India, according to current legislation.

On reaching the age of 60, the scheme offers the choice of receiving a set pension of Rs. 1000, Rs. 2000, Rs. 3000, Rs. 4000, or Rs. 5000. This will be determined by an individual's age as well as their contribution.

NPS vs Atal Pension Yojana - Major Differences

NPS

Atal Pension Yojana

The National Pension Scheme has the entry age as a minimum of 18 years of age, and the maximum is 55 years. 

Atal Pension Yojana has an entry age of 18 years and a maximum age of 40 years.

Only Indian citizens and NRIs are allowed to invest in this scheme.

The Atal Pension Yojana is only open to Indian Citizens.

NPS does not guarantee the pension post-retirement.

The Atal Pension Yojana gives a guaranteed pension after retirement.

NPS can give investors this scheme a tax rebate of up to an amount of Rs. 2 lakhs.

It also doesn't give the applicant any tax benefits. 

Only the tier 2 accounts would let premature withdrawals.

Under this scheme - you would not be allowed to withdraw the money invested before the term ends. When there is the unfortunate demise of the investor or the investor has a medical condition that the withdrawal would be considered.

NPS gives investors the option of 2 types of accounts that are Tier 1 and Tier 2.

Atal Pension Yojana gives investors only one account.

NPS can give investors the options where he or they could choose to invest their money.

Atal Pension Yojana will not give you the choice of selecting the investment of your choice.

The National Pension Scheme does not offer government support, and all of the contributions that are made would be made by the investor only.

With the Atal Pension Yojana, the Government will not give the investor any monetary support.

There are significant differences when APY vs NPS is put together, but there are also some similarities between the two.

What are the Similarities Between NPS and APY?

  • The Atal Pension Yojana and National Pension Scheme are managed by PFRDA.
  • Both of the schemes are meant for retirement, and they assist in creating a retirement wealth corpus.
  • The pension that is received under both of these schemes is taxable under the existing tax prevailing laws.
  • Once both of the schemes have reached maturity, a fixed pension amount throughout the lifespan of the individual is received.
  • The contribution to both of the schemes will qualify for deduction within Section 80CCD (1) to the maximum of Rs. 1.5 lakh. 
Invest the way you want
Join millions of Indians who trust and love Groww
EXPLORE PRODUCTS
Loading...
ⓒ 2016-2024 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 4.9.9
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  GROWWMF |  SBI |  AXIS |  HDFC |  UTI |  NIPPON INDIA |  ICICI PRUDENTIAL |  TATA |  KOTAK |  DSP |  CANARA ROBECO |  SUNDARAM |  MIRAE ASSET |  IDFC |  FRANKLIN TEMPLETON |  PPFAS |  MOTILAL OSWAL |  INVESCO |  EDELWEISS |  ADITYA BIRLA SUN LIFE |  LIC |  HSBC |  NAVI |  QUANTUM |  UNION |  ITI |  MAHINDRA MANULIFE |  360 ONE |  BOI |  TAURUS |  JM FINANCIAL |  PGIM |  SHRIRAM |  BARODA BNP PARIBAS |  QUANT |  WHITEOAK CAPITAL |  TRUST |  SAMCO |  NJ