The National Pension System (NPS) and Atal Pension Yojana (APY) are two important pension schemes regulated by the Pension Fund Regulatory and Development Authority (PFRDA). While NPS is a market-linked retirement savings system that allows subscribers to build a pension corpus, APY focuses on providing a guaranteed minimum pension after the age of 60.
For aspirants preparing for banking and regulatory exams, understanding their eligibility, contribution, withdrawal, pension benefits and latest regulatory changes is important. PFRDA’s 2026 updates, especially the NPS Swasthya guidelines issued in September 2026, have added an important new dimension to the pension ecosystem.
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Download the NPS and APY Quiz PDF to revise important concepts, features, benefits, eligibility, contributions and latest PFRDA updates. The PDF is useful for quick revision and exam-focused practice.
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Test your preparation with the NPS and APY Practice Quiz and check your understanding of key concepts, differences, benefits and recent updates.
1. Which statement best describes the National Pension System (NPS)?
2. NPS became operational for eligible new Central Government employees from which date?
3. When was NPS opened on a voluntary basis to all citizens of India?
4. What does PRAN stand for in the NPS framework?
5. Which authority regulates the National Pension System in India?
6. Under the current NPS All Citizen Model, what is the eligible entry-age range stated in the provided material?
7. Which of the following is eligible to join NPS under the All Citizen Model, subject to applicable conditions?
8. Which NPS account is the principal retirement-oriented account?
9. Which statement best describes NPS Tier II?
10. Under NPS Active Choice, what is the maximum allocation to Equity (E) under the common-scheme limits stated above?
11. Under NPS Active Choice, what is the maximum allocation to Alternative Investment Funds (A) stated in the material?
12. What is the key feature of NPS Auto Choice or Life Cycle Funds?
13. What is the main purpose of the Multiple Scheme Framework (MSF) for eligible non-government NPS subscribers?
14. For ordinary NPS partial withdrawal before age 60, the maximum amount is generally linked to what?
15. How many partial withdrawals before age 60 are stated as permitted under the revised NPS framework in the provided material?
16. What is the normal minimum interval between ordinary NPS partial withdrawals before age 60, as stated above?
17. Which date is associated with the major 2026 amendment to the PFRDA NPS Exit and Withdrawal Regulations mentioned above?
18. Under the revised non-government NPS normal-exit structure described above, what maximum share may generally be taken as lump sum?
19. Under the revised normal-exit framework described above, what is the general minimum annuitisation share?
20. Under the normal-exit small-corpus relaxation described above, what can happen when the corpus is up to Rs.8 lakh?
21. Under the normal-exit small-corpus provisions described above, which corpus band receives a special rule where up to Rs.6 lakh may be taken as lump sum?
22. Under the revised premature-exit rule described above, what is the general maximum lump-sum share?
23. Under the revised premature-exit rule, what is the general minimum annuitisation share?
24. What small-corpus threshold is stated above for possible 100% withdrawal on premature exit from NPS?
25. Under the current framework described above, what happens to the old 5-year minimum subscription rule for the NPS All Citizen Model?
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What is the National Pension System?
The National Pension System (NPS) is a defined-contribution pension system regulated by PFRDA. It helps individuals create a retirement corpus by making regular contributions that are invested in permitted asset classes. Unlike a traditional fixed-pension system, NPS returns are linked to market performance. NPS is available through government and non-government models, including the All Citizen Model, Corporate Model, Central Government and State Government models.
- It is regulated by PFRDA.
- It is a defined-contribution and market-linked pension system.
- Under the All Citizen Model, eligible individuals can join between 18 and 85 years.
- Subscribers can choose from permitted investment options.
- NPS has Tier 1 and Tier 2 accounts.
- Tier 1 is the main retirement account.
- Tier 2 is an optional investment account linked to Tier 1.
- The final pension depends on the accumulated corpus and annuity chosen at exit.
What are the main features of NPS Tier I and Tier II accounts?
NPS provides two types of accounts to subscribers. Tier 1 is the primary pension account and is designed for long-term retirement savings. Withdrawals from this account are governed by PFRDA rules.
Tier 2 is an optional account that offers greater withdrawal flexibility and works as an investment account for eligible NPS subscribers. The tax treatment and withdrawal conditions of the two accounts are different.
| Feature | Tier 1 | Tier 2 |
| Purpose | Retirement savings | Voluntary investment |
| Nature | Main NPS account | Optional account |
| Withdrawal | Subject to NPS rules | Generally more flexible |
| Pension role | Main retirement account | No direct pension role |
| Eligibility | Main NPS account | Requires active Tier I account |
How does NPS work for subscribers?
NPS follows a simple contribution-and-investment model. A subscriber contributes money to the NPS account, and the contribution is invested through the NPS investment structure. The accumulated amount grows based on contributions and investment performance. At exit, the subscriber can withdraw the permitted lump-sum amount and use the required portion for purchasing an annuity, subject to the applicable rules.
What are the investment choices available under NPS?
NPS allows subscribers to select an investment approach based on their risk preference and retirement goals. Under Active Choice, the subscriber decides the allocation among permitted asset classes within the applicable limits. Under Auto Choice or Lifecycle Choice, the allocation is adjusted automatically with age. The major asset classes used under NPS include:
- Equity
- Corporate debt
- Government securities
- Other permitted investments under the applicable PFRDA framework
What are the withdrawal and exit rules under NPS?
NPS provides different withdrawal provisions for normal exit, premature exit and permitted partial withdrawals. On normal exit under the applicable All Citizen Model rules, a subscriber can generally take up to 60% of the corpus as lump sum, while at least 40% is used for purchasing an annuity. Where the accumulated corpus is within the applicable threshold, the rules may permit full withdrawal.
- Up to 60% of the corpus can generally be withdrawn as lump sum on normal exit.
- At least 40% is generally used for annuity purchase.
- An annuity provides regular pension income.
- Partial withdrawals are allowed for specified purposes.
- Permitted purposes can include education, marriage, medical treatment and purchase/construction of a house, subject to applicable conditions.
- Withdrawal rules can differ according to the NPS model and applicable regulations.
What is Atal Pension Yojana?
Atal Pension Yojana (APY) is a government-backed pension scheme administered by PFRDA. It was launched on 1st June 2015 with a focus on providing pension security, particularly to workers in the unorganised sector. Unlike NPS, where pension income depends on the accumulated corpus and annuity, APY provides a guaranteed minimum monthly pension after the subscriber reaches 60 years. The five guaranteed minimum pension options under APY are:
| APY option | Guaranteed monthly pension |
| Option 1 | ₹1,000 |
| Option 2 | ₹2,000 |
| Option 3 | ₹3,000 |
| Option 4 | ₹4,000 |
| Option 5 | ₹5,000 |
Who can join Atal Pension Yojana?
APY has a more restricted entry age and eligibility structure compared with the All Citizen Model of NPS. A person must generally be an Indian citizen between 18 and 40 years of age and have a savings bank account or post-office savings account. Since 1 October 2022, a person who is or has been an income-tax payer is not eligible to open a new APY account. The important eligibility conditions are:
- Applicant must be an Indian citizen.
- Entry age must be 18 to 40 years.
- Applicant should have a savings bank account or post-office savings account.
- A new APY account cannot be opened by a person who is or has been an income-tax payer.
- The income-tax restriction applies to new subscribers from 1st October 2022.
How much pension is guaranteed under APY?
APY provides five pension slabs ranging from ₹1,000 to ₹5,000 per month. The subscriber selects the desired pension amount while joining the scheme. The contribution required depends on the subscriber’s age at entry and the pension amount selected. The pension starts after the subscriber reaches 60 years of age. The APY pension structure is:
- ₹1,000 monthly pension
- ₹2,000 monthly pension
- ₹3,000 monthly pension
- ₹4,000 monthly pension
- ₹5,000 monthly pension
How are APY contributions decided?
APY contribution is based mainly on the age of joining, selected pension amount and contribution frequency. Subscribers can make contributions on a monthly, quarterly or half-yearly basis through auto-debit from their savings bank or post-office account. For example, for a subscriber joining at age 18, the monthly contribution starts at:
| Guaranteed pension | Monthly contribution at age 18 |
| ₹1,000 | ₹42 |
| ₹2,000 | ₹84 |
| ₹3,000 | ₹126 |
| ₹4,000 | ₹168 |
| ₹5,000 | ₹210 |
What benefits does the APY subscriber’s family receive?
APY provides benefits not only to the subscriber but also to the spouse and nominee. After the subscriber reaches 60 years, the selected pension is paid for the subscriber’s lifetime. After the subscriber’s death, the spouse is entitled to receive the same pension amount for the spouse’s lifetime. After both the subscriber and spouse pass away, the prescribed pension wealth is returned to the nominee.
| Benefit stage | Benefit |
| Subscriber after 60 | Selected guaranteed monthly pension |
| After subscriber’s death | Same pension to spouse |
| After death of subscriber and spouse | Pension wealth to nominee |
What is the difference between NPS and APY?
Although both NPS and APY are regulated by PFRDA, their objectives and structures are different. NPS is a broader market-linked retirement savings system, while APY focuses on providing a guaranteed minimum pension to eligible subscribers. This difference is important for understanding India’s pension architecture.
| Feature | NPS | APY |
| Regulator | PFRDA | PFRDA |
| Nature | Defined contribution, market-linked | Guaranteed minimum pension |
| Main focus | Retirement corpus | Guaranteed pension |
| General entry age | 18–85 years under All Citizen Model | 18–40 years |
| Return | Market-linked | Guaranteed minimum pension structure |
| Pension amount | Depends on corpus and annuity | ₹1,000–₹5,000 |
| Pension starts | Based on exit and annuity rules | Age 60 |
| Tier I/Tier II | Yes | No |
| Income-tax payer restriction | No equivalent APY restriction | New income-tax payers cannot join |
| Spouse benefit | Depends on annuity option | Same pension to spouse |
| Nominee benefit | As per applicable NPS exit rules | Pension wealth after subscriber and spouse |
What is NPS Swasthya introduced through the September 2026 PFRDA guidelines?
NPS Swasthya is one of the most important recent PFRDA developments for 2026. PFRDA issued the Operational Guidelines for NPS Swasthya under NPS, 2026, on 18 September 2026. It combines an NPS investment account with a separate mandatory super top-up health insurance component. This makes NPS Swasthya an important development linking retirement savings with healthcare protection. The key features include:
- It is part of the NPS framework.
- It combines an NPS Swasthya investment account with a mandatory super top-up health insurance policy.
- The investment and insurance components remain separate.
- Eligible individuals can participate subject to the operational guidelines.
- Healthcare-related withdrawal provisions are available under the applicable framework.
- The insurance component operates subject to applicable insurance regulations.
What are the contribution and charge details under NPS Swasthya?
The initial contribution under NPS Swasthya has to cover the applicable first-year insurance premium and other specified amounts. The framework also provides for an investment contribution and annual maintenance charge. This makes it different from a normal NPS account because the subscriber’s initial payment includes both the pension investment and health-related components. The important figures are:
| Component | Amount/requirement |
| NPS Swasthya investment | ₹1,000 minimum |
| Annual maintenance charge | ₹200 + applicable taxes |
| Subsequent contribution | Minimum ₹10 |
| Health insurance | Mandatory super top-up policy |
| Additional Pension Fund charge | Up to 0.08% p.a. of AUM + applicable taxes |
What did PFRDA change regarding NPS transactions in September 2026?
On 14 September 2026, PFRDA issued an advisory on the mandatory capture of Transaction ID (TID) in the Sender to Receiver Information field while remitting NPS contributions to the Trustee Bank. This is an operational update rather than a change in pension benefits or withdrawal rules. The update is important because it supports:
- Better transaction identification
- Easier contribution reconciliation
- Improved payment tracking
- Better linking of remittance information
- Reduction in transaction-related reconciliation issues
Did the September 2026 PFRDA updates change the APY pension amount?
The September 2026 PFRDA updates do not indicate a change in the core APY pension structure. The existing APY framework continues to provide guaranteed minimum monthly pension options of ₹1,000, ₹2,000, ₹3,000, ₹4,000 and ₹5,000 after the subscriber reaches 60 years. For exam preparation, candidates should continue to remember:
- APY entry age: 18–40 years
- Pension starts at: 60 years
- Minimum guaranteed pension: ₹1,000
- Maximum guaranteed pension: ₹5,000
- New income-tax payers cannot join APY.
- Spouse receives the same pension after the subscriber’s death.
- Pension wealth goes to the nominee after the death of both subscriber and spouse.
FAQs
NPS is a PFRDA-regulated, defined-contribution and market-linked retirement savings system.
APY is a PFRDA-regulated pension scheme that provides a guaranteed minimum monthly pension after the age of 60.
NPS offers market-linked retirement benefits based on the accumulated corpus, while APY provides a guaranteed minimum pension of ₹1,000 to ₹5,000 per month.
Under the All Citizen Model, eligible individuals can join NPS from 18 to 85 years, subject to applicable conditions.
Eligible individuals can join APY between 18 and 40 years.
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