Distinctions between Atal Pension Yojana and National Pension System


The two pension schemes in which many of us invest to save for retirement are the Atal Pension Yojana (APY) and the National Pension System (NPS). The provision of a lifelong annuity after starting an APY or NPS account is what distinguishes them as a true-to-label pension plan. 

Both the NPS and the APY have delayed pension plans, which means that you must save for a certain period before receiving a normal income. Furthermore, the PFRDA regulates both APY and NPS in terms of its laws and recommendations.

There are numerous distinctions between APY and NPS that you should be aware of before investing in either.

Benefits that are clearly defined

The APY is a defined benefit pension plan, whereas the NPS is a defined contribution pension plan. The guaranteed minimum pension is known from the moment the account is opened. NPS differs from APY in that it is a voluntary, defined contribution retirement savings plan. 

Neither the growth nor the pension amount is guaranteed in the NPS. The funds are invested in equities, debt, or a combination of both. The National Pension System (NPS) is a market-linked pension plan in which the amount of pension is determined by how much money is saved.

The pension that is guaranteed

The pension in an APY account is guaranteed and known to the subscriber from the moment the account is opened. Just at age of 60, subscribers will get a mandated minimum pension of Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000, and Rs. 5,000 per month, depending on their payments.

The pension amount for NPS subscribers is determined based on the corpus accrued at maturity and the existing annuity rates at the time. Using the NPS pension calculator, one can get an estimate of how much one can expect to get as a pension if they save a given amount in NPS.


While APY returns are fixed at roughly 8% for APY subscribers, NPS returns are tied to the performance of the underlying assets such as stock and debt. 

The Atal Pension Yojana provides subscribers with a guaranteed rate of 8% guaranteed return, as well as the possibility of higher profits if the rate of return is higher than 8% at maturity.

Pension at its highest level

In the case of APY, the amount of your pension is fixed and is based on how much you save regularly. APY returns are guaranteed and fixed, although they are subject to an investment cap and a pension amount cap.

The amount of the pension in the NPS is determined by the amount used to purchase an annuity from a life insurance provider.

Follow and connect with us on Facebook, LinkedIn & Twitter


Please enter your comment!
Please enter your name here