UPS vs NPS vs OPS: Last-drawn basic pay Rs 1,10,000, pensionable service 28 years; which scheme may help you get highest pension?

This is the oldest pension scheme in India. Started in the British era, it went through several changes over the decades. In 1998, the government changed the retirement age of employees from 58 years to 60 years. The pension scheme was discontinued after Centre introduced NPS, but it was reintroduced in states like Himachal Pradesh, Punjab, and Chhattisgarh in last few years.

To get an OPS pension, an employee needs to complete at least 10 years of service. Once they retire, their average last 10 months of basic pay are taken into account for pension calculation. To get an OPS pension, employees don't need to contribute to any pension fund.

The central government replaced OPS with NPS in 2004. All central government employees who retired after December 31, 2003, needed to choose NPS. Most state governments followed the path and replaced OPS with NPS.

In NPS, one needs to contribute to their retirement corpus during their job. The government also contributes to it. The employee gets a maximum 60 per cent lump sum at retirement and the annuity option to get a monthly income. If the employee wants, they can purchase an annuity from their 100 per cent corpus. 

Centre announced UPS in October 2024 and notified it in January 2025. UPS is a mix of NPS and OPS, where an employee gets a minimum assured pension. The government and the employee contribute to the employee's UPS account. The pension also depends on the returns from the invested amount.

The pension of an employee will be 50 per cent of their average basic salary of last 12 months before retirement. However, to get that much, they need to complete at least 25 years of service. At the time of retirement, the employee will also get a lump sum amount.

We will calculate projected salaries in NPS, UPS, and OPS for a government employee whose last-drawn basic pay is Rs 1,10,000, and pensionable service is 28 years.

For OPS, the last 10-month average basic pay will be taken into account. So, the estimated pension will be Rs 55,000. At 53 per cent DR, the total estimated pension will be Rs 84,150.

 

The estimated family pension will be Rs 33,000, and including a 53 per cent, the estimated total pension will be Rs 50,490.

The estimated monthly pension in this case will be Rs 55,000 (excluding dearness relief). If we add 53 per cent DR, the estimated pension will be Rs 84,150.  The employee will also get an estimated lump sum amount of Rs 9,42,480.

The estimated monthly family pension will be Rs 33,000. If we include 53 per cent DR, the estimated total pension will be Rs 50,490.

Since the NPS pension depends on the employee and the employer's contribution and the basic pay changes with time, the projection is not easy. So, here we are projecting a scenario where we assume that the employee and employer contribution in the 1st year was Rs 11,000, and they increased the amount by 5 per cent every year for 28 years. We are taking 9.18 per cent as the pre-retirement return and 6.75 per cent as the post-retirement return.

 

The estimated retirement corpus will be Rs 2,57,40,856, and the estimated monthly pension will be Rs 57,917.