NPS vs APY: When it comes to investing, fixed deposits often come to mind. Investing in these schemes offers safe investments and excellent returns. However, the government also operates several schemes that offer safe investments and excellent returns. Currently, public awareness about retirement is steadily increasing in the country. This is evident in the fact that the number of subscribers to the National Pension System (NPS) and the Atal Pension Yojana (APY) has surpassed 90 million. The total asset under management (AUM) of both schemes exceeded ₹16 lakh crore as of October 9, 2025. Both schemes are administered by the Pension Fund Regulatory and Development Authority (PFRDA).

NPS launched in 2004

NPS was initially implemented only for central government employees. Later, it was opened to the general public as well. Today, this scheme is mandatory for government employees in 39 states and union territories. Private sector and self-employed individuals can also invest voluntarily.

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Two Accounts in NPS

The National Pension System has two types of accounts: Tier I and Tier II. Tier I is a mandatory pension account, from which funds can be withdrawn only at the time of retirement. Tier II is a voluntary account that functions like a normal savings account. Anyone between the ages of 18 and 70 can invest in NPS. The minimum investment can start from ₹500.

On reaching the age of 60, the subscriber receives a lump sum payment of 60% of the total deposit, while the remaining 40% is used to purchase an annuity that provides a regular pension. Partial withdrawals are also available after three years.

Two Investment Options

Investors have two options in NPS: Active and Auto. In the active option, the investor decides which asset classes to invest their contributions in. These include equity, corporate debt, government securities, and alternative investment funds (AIFs). In the auto option, investments are automatically divided into different asset classes based on age. Recently, the equity investment limit has been increased to 100% under the multiple scheme framework.

Invest easily

Investing in NPS is possible through both a bank branch and the NPS portal. When applying online, certain required documents, including Aadhaar, PAN, and bank account details, must be submitted. After verification, the investor is issued a Permanent Retirement Account Number (PRAN), which allows them to manage their investments online.

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Atal Pension Yojana

The Atal Pension Yojana was launched in 2015. This scheme is for individuals working in the unorganized sector who are not covered under any other social security scheme and do not pay income tax. The number of subscribers under this scheme reached 76.5 million in May 2025, reflecting its popularity.

Pension from ₹1,000 to ₹5,000

Subscribers under the Atal Pension Yojana must be between 18 and 40 years of age. Accounts can be opened through a bank or a post office. Contributions to the scheme are available on a monthly, quarterly, or half-yearly basis. Upon retirement, subscribers receive a monthly pension ranging from ₹1,000 to ₹5,000. The government contributes 50 percent of eligible subscribers’ contributions, up to a maximum of ₹1,000 per month.