NPS vs APY: Can I have an account in the National Pension Scheme and Atal Pension Yojana at the same time?

Those working in both organised and unorganised sectors have to think about their retirement after a certain stage, exactly why making necessary investments becomes very significant. While there are many investment options, employees willing to make savings in funds for receiving pension after retirement can go for the National Pension Scheme (NPS) or the Atal Pension Yojana (APY). Extended by the Government of India, both schemes come with distinctive features and benefits. While people  usually resort to either one of them for their retirement plans, many may also wonder if they invest in both schemes at the same time. 

Can I invest in the National Pension Scheme and the Atal Pension Yojana (APY) at the same time?
Are you wondering if you can invest in two pension schemes including the National Pension Scheme (NPS) or the Atal Pension Yojana (APY) at the same time? Well, the answer is yes. However, you will need to fulfil all the eligibility criteria in both cases. 

To understand this better, let's learn about the features of both NPS and APY, its eligibility criteria, and returns, among other things. 

What is NPS?

A voluntary retirement savings plan, the National Pension Scheme (NPS) allows subscribers between the ages of 18 and 65 to open a Tier 1 or Tier 2 retirement savings account. The contributions made by the subscribers are added to the government securities and equity and further accumulated into a fund. 

What is APY?

Another government-backed pension scheme, the Atal Pension Scheme aims to help individuals with a lower income by offering them financial security. Subscribers can make contributions to the scheme as per their income and requirements. 

NPS vs APY: Features of the schemes

There are certain differences and similarities between the National Pension Scheme and the Atal Pension Scheme. Check the features of NPS and APY:

Joining age: While ianyone from 18 to 65 years can apply for the National Pension Scheme (NPS), those between the age of 18 and 40 can apply for the Atal Pension Yojana. 

Eligibility: Every citizen of India, whether they are an Indian resident or an NRI can apply for the National Pension Scheme. While NRIs are eligible for the Atal Pension Yojana, those paying income taxes from October 2022 are not eligible for APY. 

Accounts: Investors can hold only one account under the APY scheme, but they are allowed two types of accounts – Tier I and Tier II – in NPS. 

Nomination: As per the guidelines, adding a nominee is mandatory in both NPS and APY. 

Returns: Atal Pension Yojana extends guaranteed returns after retirement, while NPS contributions are market-linked and may not provide guaranteed returns.

Premature withdrawal: In the case of the APY scheme, premature withdrawals are allowed in case of death or serious illness. For NPS subscribers, the rule for premature withdrawals varies for both Tier I and Tier II accounts. 

Investment amount: The minimum investment amount for NPS subscribers is Rs 500, while there is no maximum limit. APY subscribers can invest as low as Rs 42 per month to a maximum of Rs 1,454 to get a minimum pension of Rs 1,000-5,000.