Atal Pension Yojana vs. Recurring Deposit


Atal Pension Yojana vs. Recurring Deposit

Atal Pension Yojana is a social security pension scheme, in which those who are not covered under any pension scheme may subscribe and contribute for a pension after their retirement.  The pension under APY is although less, but significant than having no pension at all.

On the other hand, Recurring Deposit is a financial tool in which you can invest money and get a fixed return on your investment.  The intent of both these financial tools are quite different from one another and we will cover their difference in detail in this article.


Who can apply?

Any Indian citizen or Non Resident Indian can apply for Atal Pension Yojana, provided they are between the age group of 18 to 40 years.  On the other hand, there is no such age limit set for opening a recurring deposit for anyone.

In terms of Intent of Investment

The intent of investment for both the schemes are way too different.  Atal Pension Yojana ensures that you contribute whatever less you save every year and get a fixed pension after you retire.  However, recurring deposit calls for any investment that you can save every month and get a fixed amount after a certain period.

The difference in objective of investment

The objective of Atal Pension Yojana is to create a corpus for your old age wherein you get a fixed income every month, once you retire.  On the other hand, the objective of RD is to grow your money at a decent rate of interest.

Where to open accounts

You can open both Atal Pension Account and Recurring deposits in most of the public sector banks and post offices.

The Government’s Contribution

There is a contribution of Rs 1,000 or 50 per cent of the amount of contribution from government side if you are contributing in APY.  On the other hand, there is no such contribution from government in case of recurring deposit.  Whatever you save is what you get after a fixed period in RD.

The age for getting returns

The age after which you start getting your returns in Atal Pension Yojana is 60 years.  That is the age when most of people retire.  In case of recurring deposit, there is no age of getting returns.  As a matter of fact, there is just a period after which you get a fixed amount out of your investments.

Both Atal Pension Yojana and Recurring Deposits are tools of investment and securing your future.  However, the way they do it for you are a little different from one another.  On one hand, APY is a government backed scheme, whereas on the other, RD is a choice that you can make.

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