NPS vs. OPS – Learn Which Pension Scheme Is Most Beneficial

by
NPS vs. OPS

NPS vs. OPS: Retirement planning is crucial for everyone. Timely planning can help avoid future financial difficulties. Most people, even government employees, begin preparing for their pension while still employed. Currently, in India, new central government employees receive a pension under the NPS (National Pension Scheme).

Central government employees recruited before December 22, 2003, receive a pension under the OPS (Old Pension Scheme). Furthermore, after April 1, 2025, employees can also choose to receive a pension under the UPS (Universal Pension Scheme). Let’s explore the differences between the three pension schemes and which one is most beneficial.

Differences between NPS and OPS

The NPS scheme is open to both private and government employees. Employees contribute 10% of their salary. This scheme is linked to the stock market. At the time of retirement, the employee receives 60% of the total deposit as a lump sum, and the remaining 40% is paid as an annuity.

Under OPS, central government employees receive a guaranteed pension based on their last basic salary and years of service. Employees who have served for at least 10 years are eligible for OPS. Dearness allowance increases twice a year. Employees do not have to make any deductions from their salary for this scheme, and GPF benefits are also available.

Which scheme is most beneficial?

If a government employee is eligible for OPS, OPS is most beneficial for them because it offers benefits such as a guaranteed pension and dearness allowance. NPS does not offer a guaranteed pension, but it provides returns based on investment, and private employees, in addition to government employees, can also avail themselves of it.

Related Stories

Latest
Follow on Google