Retirement plan is a very important financial decision. Proper planning can reduce many future difficulties. All people plan pension during their jobs. Even if they are government employees. Currently, new government employees in India get pension under NPS i.e. National Pension Scheme.
Retirement plan is an important financial decision for every employee. Future uncertainty can be avoided by choosing the right plan. Currently three major pension schemes are available in India:
Old Pension Scheme (OPS) – Old Pension Scheme
National Pension Scheme (NPS) – National Pension Scheme
Unified Pension Scheme (UPS) – Integrated Pension Scheme (1 April 2025 will be implemented)
Let us compare these three schemes and understand which scheme is most beneficial.
1. Old Pension Scheme (OPS) – Old Pension Scheme
Who can benefit?
Benefits:
Guaranteed Pension: Employees get 50% of the final basic salary as pension.
Dearness allowance (DA): DA increases twice a year, which also increases pension.
No deduction: No contribution is taken from the salaries of employees.
GPF Facility: Government provides General Provident Fund for employees.
Lacks:
Not available to new government employees.
Financial burden is high on the government.
Good for whom?
This is the best plan for employees who are eligible for OPS.
2. National Pension Scheme (NPS) – National Pension Scheme
Who can benefit?
Benefits:
Stock market based returns: The pension fund in it depends on the stock market.
Flexibility: Anyone can invest in this scheme and choose the pension fund management company of their choice.
60% of the amount is found outright: 60% of the total deposit at the time of retirement can withdraw tax-free.
40% of the amount goes into annuity: which keeps on getting pension throughout life.
Lacks:
No guaranteed pension: Pension is not certainty due to stock market fluctuations.
Pension does not increase according to inflation.
Good for whom?
NPS is a good option for government employees who are not eligible for OPS and private sector people retirement planning.
3. Unified Pension Scheme (UPS) – Integrated Pension Scheme (Applied from 1 April 2025)
Who can benefit?
Benefits:
Guaranteed Pension: 50% of the average basic salary of the last 12 months will be in the form of pension.
Government contribution: Government will contribute 18.4% of salary.
Increase according to inflation: Pension will continue to increase from time to time.
Family Security: After the death of the employee, the family will get 60% pension.
Minimum Pension Guarantee: A minimum pension of Rs 10,000 will be available (if the employee has done a job for 10 years).
Lacks:
There will be an alternative scheme for all government employees, not mandatory.
Right now the complete information and rules of this scheme are not clear.
Good?
This can be a better option for government employees who are not eligible for OPS and do not want to take risks in NPS.
Which scheme is the best? (OPS vs NPS vs UPS)
Features OPS (Old Pension Scheme) NPS (National Pension Scheme) UPS (Integrated Pension Scheme) Availability only before 2003 for government and private employees only for government and private employees only for government and private employees (from 1 April 2025) Pension Guarantee Yes (50% of the last salary) (50% last pay) (depending on the stock market) yes (50% dependent on the stock market) yes (50% of the last 12 months average salary). The amount guaranteed pension 60% lump sum + 40% annuity guaranteed pension pension to the family pension yes no (60%) No 10% salary contribution of 10% salary
Best Plan:
1 If you are eligible for ops, this is the best option.
2 If OPS cannot be found, then UPS (Unified Pension Scheme) can be a good option.
3 3 is suitable for private employees and higher risk -taking investors.
conclusion
If a government employee is eligible to take pension under OPS, OPS is the best option. But if OPS is not an alternative, UPS can be a strong and safe option as it will get guaranteed pension. At the same time, NPS is good for those who want high returns on investment and can withstand market fluctuations.
