• The NDA government has replaced the 21-year-old pension reform by introducing the new Unified Pension Scheme (UPS), which resembles the Old Pension Scheme (OPS), offering a lifelong pension of 50% of the last drawn salary.
A table summarising the key differences between the National Pension System (NPS), Old Pension Scheme (OPS), and Unified Pension Scheme (UPS):
| Feature | National Pension System (NPS) | Old Pension Scheme (OPS) | Unified Pension Scheme (UPS) |
| Start Date | Implemented from January 1, 2004 | Existed before NPS (replaced by NPS in 2004) | Set to be implemented from April 1, 2025 |
| Contribution Structure | Employee: 10% of salary | No contributions from employees or employer | Employee: 10% of salary Government: 18.5% of salary |
| Government Contribution | Yes, the contribution amount varies | No | Yes, 18.5% of salary |
| Pension Payout | Based on accumulated contributions and market returns | 50% of the last drawn salary | 50% of the last drawn salary |
| Dearness Relief | Not applicable | Provided | Periodic hikes in line with inflation trends |
| Family Pension | Not guaranteed | 60% of the employee’s pension | 60% of the employee’s pension |
| Lumpsum Payment | Not standard | Not provided | Equivalent to one-tenth of monthly emoluments for every completed six months of service |
| Gratuity Benefits | Yes | Yes | Yes |
| Minimum Pension | No | According to minimum service requirements. | ₹10,000 for those with 10+ years of service |
| Investment Method | Market-linked investments | No investments; directly funded by government | Contributory scheme, adjustments based on actuarial assessments |
| Option to Switch | N/A | Not applicable | Employees under NPS can opt to switch to UPS |
Dig Deeper: Read about India’s Pension Fund Regulatory and Development Authority.
