Unified Pension Scheme (UPS): UPS seeks to merge the best aspects of both OPS and NPS. Under UPS, government employees are assured a fixed pension amounting to 50% of their average basic pay from the last 12 months, with provisions for inflation indexation and family pensions. UPS also incorporates a contributory element, similar to NPS, allowing employees to build their retirement corpus over time. Additionally, UPS ensures a minimum pension of ₹10,000 per month for those with at least 10 years of service.
National Pension Scheme (NPS): Introduced in 2004, NPS is a contributory pension scheme that applies to government employees and has since expanded to all sectors. Under NPS, employees contribute to their retirement fund, which is then invested in the market. Upon retirement, 60% of the corpus can be withdrawn tax-free, while the remaining 40% is used to purchase an annuity, providing a pension. While NPS offers growth potential through investments, it does not guarantee a fixed pension amount, making it less predictable than OPS.
Old Pension Scheme (OPS): OPS offered government employees a defined pension amounting to 50% of their last drawn salary, along with Dearness Allowance (DA) to account for inflation. The pension was non-contributory, directly funded by the government, ensuring financial security post-retirement. However, OPS placed a significant fiscal burden on the government, making it less sustainable over time.