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APY vs NPS

Retirement is the golden era of one’s life and being financially ready for it is very important. Central Government of India has been always trying to introduce effective ways and schemes to help citizens of India make proper financial planning for their retirement. One such step is to introduce various pension schemes that help citizens to plan for their retirement. Central Government has introduced pension schemes like Atal Pension Scheme and National Pension Scheme for the financial betterment of the citizens. Investing in these schemes is one of the important steps of financial planning. The following article will help you in understanding the features and benefits of each of the pension scheme and help you choose the right scheme that will offer you financial security during post-retirement phase.

Difference Between Atal Pension Yojana and National Pension Scheme

Atal Pension Yojana and National Pension Scheme, both are introduced by the government of India. Both the schemes offer attractive benefits to its subscribers. National Pension Scheme was introduced even before the Atal Pension Yojana. Atal Pension Yojana was introduced in the year 2015 by the then Finance Minister Mr. Arun Jaitley. There is an array of difference between both the schemes.

While National Pension Scheme is introduced to cover every individual, the Atal Pension Yojana, on the other hand, is introduced keeping in mind the retirement needs of the unorganized sector. Following are the various key differentiating factors between the Atal Pension Yojana scheme and the National Pension Scheme.

Click here to read more about Key Differentiating Factors for the both the schemes

Returns in APY and NPS

Atal Pension Yojana and the National Pension Schemes are designed to offer pension to the citizens of India. Both of the schemes differ in pension returns method. Let us understand how the returns are paid under both the schemes.

Returns under the Atal Pension Yojana

This scheme is designed for the citizens working under the unorganized sector. The pension scheme is designed to offer monthly pension to the employees of unorganized sector during the post-retirement tenure. Under the scheme, the investment by subscriber is based on their age and the amount of return to be received after the subscriber turns 60. Following is a sample illustration of Atal Pension Yojana return

Age at EntryNumber of years of contributionApproximate monthly contributionMonthly pension to be received after turning 60 yearsApproximate returns corpus created
18 years42 yearsRs 210.00Rs 5000.00Rs 8.50 Lakhs
20 years40 YearsRs 248.00Rs 5000.00Rs 8.50 Lakhs
25 years35 YearsRs 376.00Rs 5000.00Rs 8.50 Lakhs
30 years30 YearsRs 577.00Rs 5000.00Rs 8.50 Lakhs
35 years25 YearsRs 902.00Rs 5000.00Rs 8.50 Lakhs
40 years20 YearsRs 1454.00Rs 5000.00Rs 8.50 Lakhs

Returns under the National Pension Scheme

The returns earned on the contributions made under the National Pension scheme is dependent on the capital market conditions which determines the net asset value of the fund. Based on the net asset value, the units in the fund arrive at the returns earned on the investment. The present value of the investment is calculated by multiplying the Net asset value with the amount number of units held by the subscriber. The returns earned under the NPS is also dependent on the type of investment portfolio opted by the subscriber as equity portfolio in the recent years have garnered more returns. Following table illustrates the returns earned by various portfolio mix under the NPS-

Type of SubscriberPortfolio MixAverage Returns Earned
Aggressive Subscriber
  • 20% investment in Gilt Fun
  • 30% Corporate Bond
  • 50% Equity Funds
  • In 6 months – 8.31%
  • In 1 Year – 16.48%
  • In 3 Years – 9.49%
  • In 5 Years – 12.61%
  • Balanced Subscriber
  • 33.3% Gilt Funds
  • 33.3% Corporate Bonds
  • 33.3% Equity Funds
  • In 6 months – 6.71%
  • In 1 Year – 11.49%
  • In 3 Years – 9.74%
  • In 5 Years – 11.75%
  • Conservative Subscriber
  • 50% Gilt Funds
  • 30% Corporate Bonds
  • 20% equity Fund
  • In 6 months – 5.36%
  • In 1 Year – 7.17%
  • In 3 Years – 9.93%
  • In 5 Years – 11.04%
  • Over-Conservative Subscriber
  • 60% Gilt Funds
  • 40% Corporate Bonds
  • In 6 months – 3.52%
  • In 1 Year – 1.49%
  • In 3 Years – 10.24%
  • In 5 Years – 10.04%
  • How to Invest in an APY and NPS?

    Investing under both the scheme is quick and easy. With few simple steps, investors can easily invest their money in these schemes. Following is the procedure for investing in both the schemes:

    Investing under the Atal Pension Yojana Scheme

    Following is the procedure for opening the Atal Pension Yojana Account

    • Visit your nearest Points of Presence (Service Providers) and Aggregators under
    • Swavalamban Scheme, micro insurance agents, mutual fund agents, or bank where you are holding your savings bank account
    • Completely fill the Atal Pension Yojana registration form
    • Provide Aadhar card number and mobile number on the registration form
    • If any investor does not have an Aadhar card, then it is mandatory to attach relevant required KYC documents
    • Pay initial contribution amount and your APY account is opened
    • Kindly note, for subsequent contribution payment, it is best to keep the required balance in your savings account, so that your monthly contribution is directly debited from your account towards the scheme.

    Investing in NPS

    By following the below given simple steps, you can easily open an NPS account and make your monthly investments under the scheme

    • Opening of NPS account can be done in 2 ways namely in online channel and offline channel
    • The registration under the scheme can be done with the help of Aadhar Card or PAN Card.
    • Upon successfully filling of form, the investors need to pay the initial contribution amount and in this manner, the account under the NPS shall be opened.
    • All other subsequent contributions shall be debited from your savings account or the subscriber can visit the nearest Point of Presence and pay the monthly contribution.

    FAQs on APY vs NPS

    Can a person have both NPS and APY?

    Yes, an individual can enroll under both National Pension Scheme and Atal Pension Yojana at the same time.

    Is it better to invest in NPS?

    The investment decision varies from person to person as Atal Pension Yojana offers guaranteed returns while NPS does not offers guaranteed returns, but market linked returns.

    What is the difference between PPF and NPS?

    Public Provident Fund or PPF is a savings instrument introduced by the government of India which offers fixed returns. However, National Pension Scheme is a retirement specific investment tool introduced by the government which supports creating retirement corpus.

    What is the minimum contribution to NPS?

    A subscriber is required to make an initial contribution of minimum Rs. 500 for Tier 1 NPS account and Rs. 1000 for Tier 2 NPS account. For subsequent contributions, the subscribers of tier 1 NPS account holder are required to pay Rs. 500 while the Tier 2 NPS account holder are required to make a contribution of Rs. 250.

    Can I have Atal Pension Yojana and NPS?

    Yes, an individual can invest in both Atal Pension Yojana and National Pension Scheme at the same time.

    Can I open APY account without having a savings bank account?

    No, any individual who wishes to invest in the Atal pension yojana need to have a savings bank account.

    What is the mode of contribution payment under the Atal Pension Yojana?

    All the contributions to be paid towards Atal Pension Yojana are routed through the savings bank account via auto-debit facility.

    How can a subscriber contribute to NPS?

    Subscribers can contribute towards NPS in following three ways: Fill contribution slip and submit it to any POP-SP Visit eNPS website and contribute online using Net banking / Debit Card / Credit Card facility. Download NPS Mobile App and contribute anytime and anywhere as the mobile app is available for Android and IOS users.

    Will I get transaction statement under APS and NPS?

    Yes, all the subscribers are entitled to receive a detailed transaction statement of their contributions made towards APY and NPS account.

    How many accounts can I open under APY and NPS?

    Subscribers can open only ONE account under Atal Pension Yojana and National Pension Scheme.