APY vs NPS: Two schemes National Pension Scheme (NPS) and Atal Pension Yojana (APY) are being run by the government for the purpose of developing pension society and social security.
APY vs NPS: To make life comfortable and comfortable after retirement, it is important to maintain a source of monthly income. For this, retirement planning should be done from the initial days of the job. There are many types of pension plans in the market today. Two schemes, National Pension Scheme (NPS) and Atal Pension Yojana (APY) are being run by the government for the purpose of developing pension society and social security. There are some basic differences between these two schemes, you can choose the best plan according to your need, age and investment ability.
What is NPS and APY?Â
The National Pension Scheme (NPS) was launched in January 2004 for government employees. In 2009, it was also opened for the private sector. The responsibility of investing the amount deposited in NPS is given to the pension fund managers registered by PFRDA. They invest your investments in equity, government securities and non-government securities apart from fixed income instruments. In this, any person can invest a fixed amount regularly.
Atal Pension Yojana (APY) has been started by the Government of India especially for the employees in the unorganized sector. The Government of India guarantees the pension benefits received under this. This scheme is also operated by PFRDA.
Who can invest in NPS and APY
The minimum age of the subscriber should be above 18 years to invest in NPS. The maximum subscriber can join this scheme till the age of 70 years. At the same time, any Indian citizen, whose age is 18-40 years, can invest in Atal Pension Yojana (APY). Here a special difference between both the schemes is that any Indian citizen, whether resident or non-resident, can invest in NPS. can invest money. Whereas, only residents of India can invest in Atal Pension Yojana.
NPS and APY: Where is the guarantee of pensionÂ
In addition to retirement corpus, the most important thing in a retirement plan is the monthly pension. Talking about the guarantee of pension, there is no guarantee of pension after retirement in NPS. Actually, NPS is linked to the capital market. Therefore, there is no guarantee of profit in this. In this, pension fund managers registered by PFRDA invest your investments in equity, government securities and non-government securities besides fixed income instruments.
Minimum 40 percent annuity is required to be taken in NPS. Actually, annuity is a contract between you and the insurance company. Under this contract, it is necessary to buy an annuity of at least 40 percent of the amount in the National Pension System (NPS). The higher this amount, the higher will be the pension amount. The amount invested under annuity is received in the form of pension after retirement and the balance amount of NPS can be withdrawn in a lump sum.
The government guarantees pension after retirement on investing in Atal Pension Yojana (APY). In this, the subscriber can select the amount of pension based on the contribution. APY guarantees 1000, 2000, 3000, 4000 or 5000 monthly pension after 60 years of age. Suppose one starts investing in this scheme at the age of 18 years, then the minimum monthly investment for guaranteed pension of Rs 1,000 is Rs 42, Rs 84 for Rs 2,000, Rs 126 for Rs 3,000, Rs 168 for Rs 4,000 and Rs 5,000. A contribution of Rs 210 will have to be made for Rs.
NPS and APY: Account and MaturityÂ
There are two types of accounts Tier 1 and Tier 2 are opened in NPS. Funds cannot be withdrawn from Tier 1 till the age of 60 years. Tier II NPS account works like a savings account, from where the subscriber can withdraw money as per his requirement. At the same time, there is only one type of account in Atal Pension Yojana. You cannot withdraw the funds invested in Atal Pension Yojana before maturity. However, the account can be closed before the age of 60 years. At the same time, if the subscriber dies, withdrawal can be done before maturity.
NPS and APY: How much to invest
In NPS, the subscriber has the option to choose the investment amount. He can choose the monthly investment amount according to his need. At the same time, in the Atal Pension Yojana, the amount of contribution has been fixed according to the guaranteed pension amount and age.
NPS and APY: Where do you get tax benefits?
- Tax deduction can be availed under section 80CCD on investment in NPS. Sub section 80CCD of section 80CCD (1) In this pension scheme, there is tax exemption on deposits. Salaried employees can get exemption up to 10 percent of their salary and self-employed person by depositing up to 20 percent of their total income in the pension account. This exemption will be up to a maximum of Rs 1.5 lakh.
- Apart from this, under section 80CCD(1B) of the Income Tax Act, the benefit of extra tax exemption is available on investments up to Rs 50,000. Withdrawal up to 60 percent of the amount on maturity of this scheme is not taxed.
- On the other hand, talking about Atal Pension Yojana, according to the notification issued on 19 February 2016, investors in this scheme get the same tax benefit as NPS.
