Atal pension yojana vs NPS: From salaried professionals to those engaged in agriculture, everyone plans for the future. The goal is to ensure financial security in old age so that no difficulties arise. The government also runs schemes where investments can yield substantial benefits.
Among these, the Atal Pension Yojana and the National Pension System (NPS) are frequently in the spotlight. The Atal Pension Yojana was primarily launched with unorganised sector workers and low-income individuals in mind. This scheme provides a guaranteed monthly pension ranging from ₹1,000 to ₹5,000 upon attaining the age of 60. Here, we discuss both the Atal Pension Yojana and the National Pension System.
Who can invest in APY?
Only Indian citizens aged between 18 and 40 years can join this scheme. Applicants must possess an Aadhaar-linked bank account and a mobile number. Since October 2022, income taxpayers have not been eligible for this scheme. Additionally, contributing to the scheme for a minimum of 20 years is mandatory.
Key facts about NPS
The National Pension System is a voluntary retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Investments in NPS are allocated across various asset classes, such as equities, corporate bonds, and government securities. Consequently, the returns depend on market performance, and there is no guarantee of a fixed pension amount.
Indian citizens, NRIs, and OCIs aged between 18 and 85 years can invest in NPS. The scheme is open to a wide range of individuals, including income taxpayers. This is why NPS is rapidly gaining popularity among salaried employees, the self-employed, and high-income investors.
What is the main difference between APY and NPS?
The most significant difference between the two schemes lies in the returns. In the APY scheme, an investor knows in advance the pension amount they will receive after retirement, whereas in the NPS, the final return depends on market performance. On the other hand, the NPS has the potential to build a substantial retirement fund over the long term, while the APY focuses on providing a fixed monthly income.
Find out who should choose APY and who should opt for NPS
For reference, if an individual belongs to a low-income group and desires a fixed pension post-retirement, APY can be a better option. Conversely, for investors seeking higher returns and a larger retirement corpus over the long term—and who are willing to accept market risk—the NPS is considered more suitable.
