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National Pension Scheme Vs. Atal Pension Yojana

Published On Oct 01, 2021 10:30 AM By InsuranceDekho

Retirement is a period of life when you don't work effectively and accordingly, you don't have a customary type of revenue. Yet, even at this phase of your life, you need to meet your essential and clinical costs. It is significant for each person to make their retirement corpus while they are still working. There are a few sorts of speculation plans and approaches through which you can support and meet your post-retirement costs. Two such plans presented by the public authority are National Pension Scheme (NPS) and Atal Pension Yojana (APY). The two plans intend to help people post-retirement. 

All About The National Pension Scheme (NPS) 

NPS is a benefits scheme dispatched by the public authority of India as a government managed retirement drive. NPS is an intentional retirement conspiracy and is likewise one of the least expensive long haul money growth strategies for retirement under the domain of the Pension Fund Regulatory and Development Authority (PFRDA). Under NPS, an individual should contribute a specific sum routinely in a benefits account during their functioning life. 

NPS offers market-connected returns as it relies upon monetary business sectors. One can put resources into NPS till they are 65 years old. On development, the record holder can pull out 60% of the complete interest in a singular amount, and the equilibrium of 40% of the contributed sum is utilized around pay annuities (benefits) for the duration of the existence of the record holder. 

All About The Atal Pension Yojana (APY) 

APY is a retirement plan dispatched by the public authority of India, pointed toward giving guaranteed benefits to low-paying people in the disorderly area. The age of the endorser of the plan ought to be between 18-40 years. Under APY, least annuities of Rs. 1,000 or Rs. 2,000 or Rs. 3,000 or Rs. 4,000 or Rs. 5,000 every month is given on achieving the age of 60 years relying upon the commitments made by the endorsers. 

At the point when you put resources into this plan, you need to pick the benefits sum required by you, post-retirement. Based on your age, the benefits sum is picked and recurrence of commitment, the sum which should have been contributed by you is determined. On development, the embraced benefits sum is paid all through your and your companion's lifetime. 

Similarities Between NPS and APY 

The two NPS and APY, being retirement plans dispatched by the public authority of India have certain likenesses: 

  • The point of both the plan is to assist people with adapting up to their post-retirement costs. Subsequently, the two plans are retirement-situated which assists with making a retirement corpus for people. 
  • Both the plans go under the domain of and are overseen by the Pension Fund Regulatory and Development Authority (PFRDA). 
  • The two plans give a decent measure of benefits for the duration of the existence of the individual deciding on this plan once the plan develops. 
  • The two plans give tax breaks. Under Section 80CCD(1) of the IT Act,1961, a maximum allowance of Rs. 1.5 lakhs is permitted on commitment to both the plans. Also, a further allowance of Rs. 50,000 can be asserted under Section 80CCD(1B) on commitment to the two plans. 
  • The occasional benefits received by people post-retirement under both the plans are available according to the chunk paces of the people.

Take Away

Both National Pension Scheme and The Atal Pension Yojana are great examples of retirement plans launched by the Indian government. It should also be noted that both of them are well trusted and backed by the government itself. Therefore a safe and secure option to invest into.

Also read: 

Things To Consider Before Retirement Planning

What Is The Role Of Annuity In Retirement Planning?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.            

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