The Indian government currently operates three major pension schemes:
- Old Pension Scheme (OPS) – Offers a guaranteed pension with DA benefits.
- Unified Pension Scheme (UPS) – Introduced in 2024, also provides guaranteed pension with family pension benefits.
- National Pension Scheme (NPS) – A market-linked pension plan where returns are not fixed and depend on investments.
If an employee’s last drawn basic salary is ₹90,000, OPS and UPS offer a fixed pension of ₹68,850 (with DA included), while NPS varies based on market returns.
1️⃣ Old Pension Scheme (OPS)
✅ Guaranteed pension based on 50% of the last 10 months' average basic salary.
✅ Dearness Allowance (DA) included, increasing over time.
✅ No employee contribution required.
❌ Not available for new employees (applicable only to those who joined before 2004).
Example Calculation:
- If the last basic salary is ₹90,000, the pension is ₹45,000 + DA (53%) = ₹68,850/month.
2️⃣ Unified Pension Scheme (UPS)
✅ Guaranteed pension based on 50% of the last 12 months’ average basic salary.
✅ Minimum ₹10,000 pension for those with at least 10 years of service.
✅ Family pension benefit (60% of pension amount to dependents).
✅ DA included, similar to OPS.
❌ Limited to central government employees.
Example Calculation:
- With a ₹90,000 basic salary, the pension is ₹45,000 + DA (53%) = ₹68,850/month.
3️⃣ National Pension Scheme (NPS)
✅ Market-linked pension – potential for higher returns.
✅ Open to all employees, including private sector workers.
✅ Tax benefits on investments.
❌ No guaranteed pension – amount depends on investment returns.
❌ Employees must contribute to the fund.
Example Calculation:
- If an employee invests ₹10,000/month from age 30 to 60 (30 years), assuming an 8% annual return, the retirement corpus is ₹1.5 crore.
- 40% of this corpus (₹60 lakh) is used for an annuity, generating an estimated ₹30,006/month pension (assuming a 6% return).
Comparison Table
| Pension Scheme | Pension Calculation | Monthly Pension (₹90,000 Basic Salary) | Total Pension (with 53% DA) |
|---|---|---|---|
| OPS (Old Pension Scheme) | 50% of last 10 months’ salary + DA | ₹45,000 | ₹68,850 |
| UPS (Unified Pension Scheme) | 50% of last 12 months’ salary + DA | ₹45,000 | ₹68,850 |
| NPS (National Pension Scheme) | Market-based (investment dependent) | ₹30,006 (approx.) | Varies with market returns |
Which Pension Scheme is Best?
- OPS & UPS provide higher, guaranteed pension with DA benefits, making them better for government employees.
- NPS is riskier but flexible, suitable for private-sector employees or those willing to invest in the market.
If job security and a fixed pension are priorities, OPS or UPS is the better choice. If market-based growth and investment flexibility appeal to you, NPS might be the right fit.
