APY and NPS: The Government of India launched the National Pension System (NPS) in the year 2004. It is a retirement savings program with a defined contribution component. Indians aged 18 to 65 years are eligible to join this scheme.
APY and NPS: Two schemes introduced by the government to provide pension benefits to the people – Atal Pension Yojana and NPS i.e. National Pension System are very popular. Knowing that both are related to retirement schemes, they are quite different in terms of eligibility, contribution, benefits and other factors. Which of the two is better? To understand this, it is also important to know the difference between Atal Pension Yojana and NPS. This will help you understand which scheme is right for you to help you.
National Pension System(NPS)
The Government of India launched the National Pension System (NPS) in 2004. It is a retirement savings program with a defined contribution component. Indians aged 18 to 65 are eligible to join the scheme, which is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). According to ICICI Direct, NPS subscribers have the opportunity to make regular contributions to their retirement accounts and grow savings over time. Depending on the subscriber’s investment choice, the contributions are invested in a mix of stocks, government-issued bonds and corporate debt.
Atal Pension Yojana or APY
Atal Pension Yojana (APY) is a government-backed pension program. The scheme was launched in 2015 to provide a guaranteed pension to Indian residents, especially those working in the unorganized sector. The Pension Fund Regulatory and Development Authority (PFRDA), which oversees the program, offers a fixed pension that ranges from Rs 1,000 to Rs 5,000 per month depending on the subscriber’s contribution and the age at which they start contributing. With a minimum contribution period of 20 years, the program is available to all Indian citizens aged 18 to 40 years.
Difference between the two plans
Atal Pension Yojana
- The scheme is open to all Indian citizens between the age of 18 and 40 years who do not have a pension plan.
- The scheme is a fixed pension plan using a combination of debt and equity securities as investments.
- In Atal Pension Yojana, contribution has to be made for 20 years.
- In this scheme, the government guarantees pension after retirement.
- The maximum contribution in Atal Pension Yojana is Rs 5000 per month.
- This scheme provides for fixed pension payment between Rs 1,000 and Rs 5,000 per month.
- Customers do not get a Permanent Retirement Account Number under the scheme.
- In this scheme the government provides a fixed amount subject to the terms and conditions.
- Nominee is mandatory in the scheme, and any person can be the nominee.
National Pension System
- Open to all Indian citizens and NRIs between 18 and 55 years of age.
- It is a market-linked scheme that offers three asset classes: asset class E (equities), asset class G (government securities) and asset class C (corporate bonds).
- National Pension System Minimum 10 years, Option to continue till age 60
- Market-linked returns which are based on how well the selected investments perform.
- There is no limit on contribution to the National Pension System.
- The pension amount in this scheme is based on the contributions paid and investment returns.
- Customers receive a Permanent Retirement Account Number.
- No contribution is made by the government in this scheme.
- It is mandatory to have a nominee, and he/she should not be the husband or wife.
