Following our update on the Unified Pension Scheme, we present a comparison chart below detailing the differences between the Old Pension Scheme (OPS), National Pension System (NPS), and Unified Pension Scheme (UPS).:

FeatureOld Pension Scheme (OPS)National Pension System (NPS)Unified Pension Scheme
(UPS)
EligibilityGovernment employees who joined service before
January 1, 2004		All government employees who joined service on or after January 1, 2004All government employees who joined service on or after January 1, 2004
Pension Calculation50% of last drawn basic salary + DABased on accumulated corpus and market returns50% of average basic salary + DA of last 12 months
Employee ContributionNONE10% of basic pay + DA10% of basic pay + DA
Government ContributionFully funded by government14% of basic pay + DA18.5% of basic pay + DA
Minimum PensionFixed amountNo fixed minimum₹10,000 per month
No lump sum paymentNo lumpsum paymentPartial withdrawal allowedFamily pension is 60% of the last drawn pension
Tax BenefitsNo tax benefits Tax benefits under Section 80CCD Tax benefits under Section 80CCD
Inflation ProtectionYes NOYes
Employee Contribution ManagementNot applicableManaged by PFRDA-regulated entitiesManaged by government
Family PensionFamily pension is availableFamily pension is available based on accumulated corpus and chosen annuity plan at retirementFamily pension is 60% of last drawn pension

Similarities

  • Employee Contribution: Both NPS and UPS require employees to contribute 10% of their basic pay + DA.
  • Tax Benefits: Both NPS and UPS offer tax benefits under Section 80CCD.

Differences

  • Pension Calculation: OPS provides a fixed pension based on the last drawn salary, while NPS depends on the accumulated corpus and market returns. UPS calculates the pension based on the average salary of the last 12 months.
  • Government Contribution: The government contributes 14% in NPS and 18.5% in UPS, while OPS is fully funded by the government.
  • Minimum Pension: UPS offers a higher minimum pension compared to OPS, while NPS does not have a fixed minimum pension.
  • Lumpsum Payment: UPS provides a lumpsum payment at superannuation, unlike OPS, which does not offer this feature.

Example

Consider an employee retiring with a basic salary of ₹50,000 and DA of ₹10,000:

  • OPS: Pension would be 50% of ₹60,000 = ₹30,000 per month.
  • NPS: Pension depends on the accumulated corpus and market returns, which can vary.
  • UPS: If the average salary of the last 12 months is ₹55,000, the pension would be 50% of ₹55,000 = ₹27,500 per month.

This comparison may help members understand the key features, similarities, and differences among OPS, NPS, and UPS.

Note:

  • The above calculations are illustrative and may vary based on individual circumstances and government policies.
  • NPS returns are subject to market fluctuations.   
  • The guaranteed minimum pension under UPS applies only to employees who joined service on or after January 1, 2004.
  • Tax benefits may change from time to time.