UPS vs NPS vs OPS: Last drawn basic salary Rs 100,000; pensionable service 30 years? What can be your monthly pension in each scheme?

What is Old Pension Scheme (OPS)?

The old pension scheme was launched in the British period, but it has gone through several changes in 100 years. Started in 1924, it was for government employees with at least 10 years of service. Post independence, it came into its present form. In 1998, an important change came into effect as the pensionable age for central government employees was increased from 58 years to 60 years.

How is pension calculated in OPS?

In OPS, the monthly pension is calculated on the basis of the last drawn salary and the years of service. 

National Pension System (NPS)

NPS was launched for central government employees in 2004, but it was open to all citizens, including NRIs in 2009. Here, the minimum pensionable service for a central government employee should be 10 years. In the scheme, employees invest 10 per cent of their monthly basic salary and dearness allowance, while the government's contribution is 14 per cent. 

How is NPS pension calculated?

In NPS, the monthly pension is not fixed. It depends on how much an NPS account holder contributes during their service years. The return from investment depends on the combination of equity and debt options an account holder can opt for.  

Unified Pension System (UPS)

It is a combination of OPS and NPS, where the government and the employee both contribute to the latter's pension amount. The government's contribution is 18.5 per cent of the basic pay and DA, while the employee's contribution is 10 per cent of the basic pay and DA.
The UPS scheme will come into effect from 1 April 2025.
Along with a monthly pension, UPS also provides a lump sum amount to retirees, where it will be equal to 1/10th of their monthly emoluments (basic pay+DA) as on the superannuation date for every six months of completed service.

How is pension calculated in UPS?

For employees with a minimum of 25 years of service, the pension is 50 per cent of their average basic salary drawn in the previous 12 months of their retirement.
A minimum Rs 10,000 pension is assured for employees with at least 10 years of service.    
It also has the provision of a family pension, where, in case of the retiree’s death, 60 per cent of the pension received immediately before the retiree’s demise is provided to their family.

OPS: Pension calculation for Rs 100,000 last-drawn basic pay and 30 years of service

Under the old pension system, the estimated pension will be Rs 50,000.

OPS: What will be family pension?

The estimated family pension will be Rs 30,000.

OPS: What will be enhanced family pension?

The enhanced family pension will be Rs 50,000.

OPS: What if one commutes 40% of their pension?

In such a case, they will get an estimated Rs 19,66,561 lump sum amount.

OPS: What will be reduced monthly pension in that case?

The reduced monthly pension after commutation will be Rs 30,000.

NPS: Pension calculation for Rs 100,000 last-drawn basic pay and 30 years of service

Since the NPS pension is based on the contribution. Here we are creating a scenario for a central government employee with LC 50 (50 per cent equity+50 per cent G-Sec), where they started with a Rs 5,000 monthly contribution and increased their amount by 5 per cent every year for 30 years. The expected rate of return is 9.44 per cent and the expected return from the annuity plan is 7 per cent. In such a case- 

Total investment= Rs 36,65,750.
Estimated Corpus= Rs 1,49,60,196
Estimated lump sum withdrawal= Rs 89,76,118
Estimated monthly pension= Rs 34,907.

UPS: Pension calculation for Rs 100,000 last-drawn basic pay and 30 years of service

The estimated pension for the employee in UPS will be Rs 50,000. 
The estimated lump sum amount that they will get will be Rs 9,180,00.

 

UPS family pension

The estimated family pension in this case will be Rs 30,00, while the lump sum amount will remain the same.