National Pension Scheme and Atal Pension Yojana main differences

Published On - September 13, 2015

admin National Pension Scheme

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National Pension Scheme (NPS) and Atal Pension Yojana are most popular social security schemes launched by the government of India. Both these schemes are intended to provide a pension at the retirement age. So, why two different pension schemes are required? What are the differences between National Pension Scheme and Atal Pension Yojana? Let’s try to figure out the difference between these schemes.

What is National Pension Scheme?

National Pension Scheme is retirement saving pension scheme launched by the government of India. This scheme is also known as a new pension scheme. This scheme is regulated and administered by PFRDA.

  • The minimum age of joining NPS is 18 years and maximum age is 55 years.
  • NPS is based on a unique Permanent Retirement Account Number (PRAN) which is allocated to each subscriber on joining NPS.
  • The NPS scheme offers two types of accounts.Tier I account – This account is known as a pension account. Withdrawal from this account is restricted till subscriber attains the age of 60 years.Tier II account – This account is normal investment account. Withdrawal from this account can be done as per requirement of the subscriber.
  • NPS gives options to invest in three funds. (1) Equity (2) Corporate Bonds (3) Government Securities.
  • NPS Subscriber can switch the asset allocation once in a financial year.
  • NPS does not provide guaranteed pension.
  • National pension scheme gives tax benefits up to 2 Lac.
  • All contributions of subscriber are invested in the pension fund schemes and the subscriber will be able to know the value of the investment on day to day basis.
  • One can open NPS account at point of presence of NPS.
  • NPS Scheme is mainly focusing on the organized sector.

What is Atal Pension Yojana?

Atal Pension Yojana is pension scheme by the government of India. Atal Pension Yojana is also known as APY. This scheme provides a defined pension, depending on the contribution, and its period.

  • The minimum age of joining APY is 18 years and maximum age is 40 years.
  • Under the Atal Pension Yojana, subscriber will receive the fixed pension from 1000 Rs per month to 5000 Rs per month.
  • Atal Pension Yojana does not offer any tax benefits
  • You can apply for Atal pension yojana at designated banks.
  • APY Scheme is mainly focusing on unorganized sector.
  • Under APY, only one account is permissible.

Conclusion –
Looking at key features of Atal Pension Yojana and National Pension scheme it is clear that “National Pension Scheme” is more beneficial to subscribers. Although NPS does not provide fixed pension but it offers multiple benefits like –

  • Flexibility in terms of Investment selection
  • Tax Benefits
  • Partial Withdrawal

After looking at the detail of NPS and APY if you feel that these schemes can help you to fulfil your financial goal, you can invest in these schemes.