Atal Pension Yojana (APY) vs. New Pension Scheme (NPS)


Atal Pension Yojana (APY) vs. New Pension Scheme (NPS)

Atal Pension Yojana and New Pension Scheme are two social security schemes in India that cater to a specific age group and aim at providing financial security to the people subscribed within it.  While the NPS is quite an old security scheme, Atal Pension Yojana has been recently launched by the BJP government at the center.

People are often confused between various schemes and often worry about the scheme they should join and the benefits they would be getting.  Both the schemes targeted in this article have different intent and purpose and we will cover them all in points.


In terms of Age

The age group that these two schemes cover at a little different from each other.  On one hand APY caters to people between 18 to 40 years of age, NPS is meant for people between the age group of 18 to 55 years.

Who can join?

For both NPS and APY, only Indian nationals are eligible to join and that includes NRIs as well.

The pension slab both the schemes cater to

Atal Pension Scheme calls for five different pension amount starting from Rs 1,000 to Rs 5,000 in multiples of one thousand.  On the other hand, the pension in NPS is decided on the parameter of Pension Fund Manager.  NPS pays fifty per cent of the money after retirement and the remaining amount on a yearly basis after retirement.

Guaranteed Pension

Atal Pension Yojana guarantees a fixed pension after retirement, however, NPS does not guarantee any pension post retirement.  NPS is simply safe and offers reasonable returns as compared to the market rates.

The type of account

Atal Pension Yojana offers just one type of account and its standard.  However, on the other hand, NPS offers a two tier of pension account, i.e. Tier I and Tier II.

Premature Withdrawal

A subscriber is not entitled to any premature withdrawal in case of Atal Pension Yojana.  Money can be claimed or withdrawn only in the case of death of the subscriber or any other exceptional situation.  On the other hand, subscriber can choose for premature withdrawal in case of NPS account.

Government’s Contribution

NPS calls for no contribution from the government side.  It is solely a personal contribution.  However, there is a decent monetary support from the government side in Atal Pension Yojana.

Tax Benefits for the contribution

There is no tax benefit in case of APY.  However, in case of NPS contributions, you can get a tax exemption of up to 2 lakh of the contribution.

Difference in reasons of joining the schemes

The only reason why someone can opt for Atal Pension Yojana is because of the fixed pension they would get after 60 years.

On the other hand, there could be any or all of the three reasons for joining the NPS:

  1. Old age financial security for the subscriber
  2. Safe and prominent returns for the investment for a longer period
  3. Secure old age by getting a fixed income after retirement

Apart from this there are certain more differences between Atal Pension Yojana and New Pension Schemes based on their respective fund managers, their nature of accounting, the places accounts could be opened and the overall intent and objective both the schemes carry respectively.  For more details on Atal Pension Yojana and New Pension Scheme, you can check separate articles on our website.

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