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Sunday, 10 July 2016

EPS vs NPS vs APY: Comparison

Retirement Planning is not just about saving for the future rather it involves systematic approach towards accumulation of corpus which would be sufficient to meet the financial obligations post retirement. Individuals may avail various retirement plans provided by the Insurance Companies or invest in Mutual Funds or Public Provident Fund (PPF) which provides lumpsum or regular income post retirement. However, many are often confused or not aware of the probable retirement benefit plans which they can avail. Government is also very serious regarding about the same so it wants individual to plan for the retirement while they are young and earning. It has launched various schemes and created awareness about it so that more and more individuals avail those schemes and provide themselves with a regular source of income after retirement.
In my previous posts I have discussed in detail about the various pension Government initiated pension schemes. Now, let’s compare these notable Pension schemes and find out which one is provides better benefits as compared to others. Please click on the link below to know more about the schemes.



Subscriber to Employees’ Provident Fund (EPF) is mandatorily covered under the Employees’ Pension Scheme (EPS). Individuals earning wages/salary above Rs 15,000/- per month have the option to opt out of EPF. Employees’ Pension Scheme provides pension to the subscriber post retirement based on the years of service and contribution made under the scheme. The minimum pension under the scheme is Rs1,000/- pm and maximum pension which may be provided under the scheme is Rs 7,500/-. However, one may defer your pension withdrawal for 2 years to earn additional hike of 8.16% on actual pension.


National Pension Scheme is open to all the citizens of India and anyone above the age of 18 years can invest in the scheme. It is a market linked scheme and return on the investment is dependent on the performance of the fund. Individuals have the option to choose from the preferred class of investment and portfolio manager to manage the funds. On attaining the age of 60, Individuals may withdraw the lumpsum but will have to mandatorily invest 40% of the proceeds in purchasing an annuity plan which will provide regular income to the individual. The return on investment is expected to be somewhere between 10%-12%. Individuals may open an account in any of the nationalized banks.


Atal Pension Yojana (APY) was launched by the Government keeping in mind the interest of the lower income group. The scheme is open for individuals aged between 18-40 years. The scheme provides a pension of Rs 5,000 per month after the age of 60 years. It is very simple to subscribe for the scheme and contribution is auto debited from the respective bank account of the individual. It is one of the cheapest retirement benefit plan available which offers decent return to the subscribers.

The return on investment comes to be around 8% approx.

Some Key Aspects of the Schemes

Which is a better Retirement Plan?

Each of the above mentioned schemes have their share of benefits and flaws. But if you take the whole product into consideration, I would prefer the National Pension Scheme (NPS) over the other two pension schemes. You may read my previous articles to know more about the respective schemes.


Employee Pension Scheme (EPS) is a decent pension plan but the return in my opinion is quite poor as compared to other schemes. Pension amount is also restricted which may not be sufficient. The minimum pension of Rs 1,000 is also pretty low for present market scenario. EPS also does not offer any lumpsum benefit to the nominee.

Atal Pension Yojana (APY) is the most affordable pension among the three, with an annual premium as low as Rs 504/-. However, the pension is restricted to maximum of Rs 5,000/- which may not be sufficient with the rising expenses. In case of death of the policy holder, the nominee will get a lumpsum of upto Rs 8.5 lakhs depending on the premium and pension plan subscribed.

National Pension Scheme (NPS) is also a very affordable scheme and is one of the well balanced products launched by the Government. Investment in the fund may be diversified in various Classes of Investment based on the appetite of an Investor to take risk. The return on the investment is expected to be decent as Fund is managed by professional fund managers. At the time of retirement the entire corpus will be paid to the Individual of which 40% mandatorily needs to be invested in purchasing a purchase plan while rest may be withdrawn as lumpsum. The scheme offers the best return among all the 3 retirement plans and offers greater flexibility as compared to the other two.

Individuals are advised to consult their Financial Investors before investing. 

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