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  • NPS vs APY

    New Pension Scheme or Atal Pension Yojana, which pension scheme should you invest in?

    Investing for your retirement is an important step. Making sure you have chosen the right pension option, which suits your requirement to lead a good retired life. With the pension plans offered by the Government of India, namely the New Pension Scheme and the Atal Pension Yojana, ensure to provide you with financial security during your retired life.

    What are the difference between the New Pension Scheme and the Atal Pension Yojana?

    The Atal Pension Yojana was announced by the Finance Minister, Arun Jaitley in the Union budget of 2015. He also announced the changes that were made towards the New Pension Scheme. Both these schemes are targeted to a specific age group of people, and cater to their financial security when they take up the scheme. The Atal Pension Yojana was recently launched this year, while the New Pension Scheme is a rather older security scheme.

    The basic difference between the two schemes are as listed below:

    1. The age of joining:

      1. New Pension Scheme has an entry age of a minimum of 18 years while the maximum is 55 years.

      2. Atal Pension Yojana has the entry age 18 years and the maximum age being only 40 years.

    2. Who can take the plan:

      1. Atal Pension Yojana states that only a resident of India can invest in this plan

      2. New Pension Scheme allows investors who are citizens of India as well as NRIs to invest in the scheme.

    3. Pension particulars:

      1. Atal Pension Yojana provides you with a guaranteed pension after retirement.

      2. While the New Pension Scheme doesn’t guarantee a pension post retirement.

    4. Tax Benefit:

      1. The Atal Pension Yojana doesn’t provide the applicant with any tax benefits

      2. New Pension Scheme provides investors of this scheme a tax rebate of up to Rs. 2 lakhs.

    5. Premature Withdrawal:

      1. Under the Atal Pension Yojana you will not be allowed to withdraw the money invested prior to the term end. In case of the unfortunate demise of the investor, or the investor has a medical condition that withdrawal may be considered.

      2. Only Tier 2 accounts will allow premature withdrawals.

    6. Type of account:

      1. New Pension Scheme provides investors the choice of 2 types of accounts, Tier 1 and Tier 2.

      2. Atal Pension Yojana, provides investors with just one account.

    7. Investments:

      1. Atal Pension Yojana does not give you the option of choosing the investment of your choice.

      2. New Pension Scheme provides investors options in which he/she can choose to invest their money.
    8. Government Contribution:

      1. With the Atal Pension Yojana, the government does provide the investor some monetary support.

      2. New Pension Scheme does not provide government support, all contributions made will be done by the investor only.

    To help make you decision you can always check the websites for the Atal Pension Yojana and New Pension Scheme to get any other information you require.

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