APY vs NPS: Whenever it comes to pension, the first thing that comes to mind is guaranteed income after retirement. We want to keep getting a fixed amount after retirement, at regular intervals, so that there is no financial problem. For this retirement planning is very important. There are many types of pension schemes offered by the government as well as many private companies in the market, choosing one of them is a difficult task. Two pension schemes are highly preferred in terms of retirement planning – National Pension Scheme (NPS) and Atal Pension Yojana (APY). Both of these are pension schemes run by the government. We will tell you here what is the difference between these two schemes. Through this, you can choose any one scheme according to your need.
What is NPS and APY
The National Pension Scheme (NPS) was launched in January 2004 for government employees. It was opened to all categories of people in 2009. In this, any person can invest a fixed amount regularly. At the same time, APY is a guaranteed pension scheme from the Government of India, which is being operated by PFRDA. This is mainly for the employees of the unorganized sector. The Government of India guarantees the benefits related to the pension received under it. To take advantage of this pension scheme, your age should be at least 18 and maximum 40 years. Under this scheme, investment will have to be made for at least 20 years.
What is the difference between both the pension plans
Eligibility to invest in the scheme
If you want to invest in National Pension Scheme, then it is necessary that you should be above 18 years of age. Along with this, the maximum age limit for this is 55 years i.e., if you are more than 55 years of age, you cannot invest in this scheme. On the other hand, talk about Atal Pension Yojana, even for this the minimum age has been fixed as 18 years, while its maximum age limit is 40 years.
Who can take the plan
Such investors, who are citizens of India, can invest money in NPS. Apart from this, NRIs can also invest in this scheme. On the other hand, only residents of India can invest in Atal Pension Yojana.
pension guarantee
Talking about the guarantee of pension, there is no guarantee of pension after retirement in NPS. Actually, NPS is linked to the capital market. Therefore, there is no guarantee of profit in this. On the other hand, by investing in Atal Pension Yojana, you get a guaranteed pension after retirement.
tax benefit
As per the existing provisions, section 80CCD provides the benefit of tax deduction on NPS account. Sub section 80CCD (1) of section 80CCD provides tax exemption on deposits in this pension scheme. Salaried employees can get exemption up to 10 percent of their salary and self-employed person by depositing up to 20 percent of their total income in the pension account, subject to a maximum of Rs 1.5 lakh. Apart from this, there is also another sub-section 80CCD (1B), under which both the salaried employee and the self-employed person can take advantage of additional tax exemption by depositing in the NPS account on their behalf. It will be up to Rs 50000. On the other hand, talking about Atal Pension Yojana, investors do not get any kind of tax benefit in this.
Withdraw money before maturity
Under NPS, Tier II NPS account works like a savings account from where the subscriber can withdraw money as per his requirement. At the same time, under Atal Pension Yojana, you cannot withdraw the money invested before maturity. This means that if you change your mind after some time of investing in the scheme and you want to invest elsewhere, then it does not have this facility. However, if the investor dies during this period or his health becomes seriously ill, then withdrawal can be considered.
types of accounts
There are two types of accounts in NPS: Tier 1 and Tier 2. Funds cannot be withdrawn from Tier 1 till the age of 60 years. Tier II NPS account works like a savings account, from where the customer can withdraw money as per his requirement. On the other hand, there is only one type of account in Atal Pension Yojana.
Investment
In NPS, investors are given the option, where they can choose to invest according to their need or desire. On the other hand, under Atal Pension Yojana, no such option is given to the investors.
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