UPS vs NPS vs OPS: Rs 94,000 average basic pay at retirement; 29 years of service; where will you get highest pension?

UPS vs NPS vs OPS: Pension is a monetary entitlement for state and central government employees. They may get it under Old Pension Scheme (OPS) or National Pension System (NPS) and the amount may vary, but at the end of the day, monthly expenses of most pensioners depend on this amount. From April 1, 2025, central government employees are free to choose Unified Pension Scheme (UPS). But what is the basic difference between these 3 prominent systems, and where can a person with Rs 94,000 average basic pay at retirement and 29 years of service get the highest pension? See calculations to know-

Old Pension Scheme (OPS) and pension calculation

This is the oldest pension system still available to many state government employees and central government employees who joined service before January 1, 2004.

The employee needs to complete a minimum of 10 years of service to be eligible for an OPS pension.

They don't need to contribute to any retirement fund to get this pension.

The pension amount depends on the sum of the average of the last 10 months' emoluments (basic salary and dearness allowance) or the sum of the last month's basic pay and DA, whichever is greater. It also has the provision of a family pension.

New Pension System (NPS) and pension calculation

Unlike OPS, where a pensioner gets the monthly pension without making any contributions to a retirement fund, an NPS pension is created by contributing to the employee's NPS account.

The employee and the government make contributions to the employee's NPS account.

The government's contribution is a maximum of 14 per cent and the employee's is a minimum of 10 per cent.

The employee can withdraw up to 60 per cent of their corpus at 60 years of age, and from the remaining 40 per cent, they need to purchase an annuity plan to get a monthly pension.

The corpus and the pension amount depend on the NPS investment performance. 

Unified Pension Scheme (NPS) and pension calculation

It is a mix of NPS and OPS. UPS offers a minimum assured pension of Rs 10,000 on completion of at least 10 years of service.

The maximum pension is 50 per cent of the basic pay and DA.

The assured pension is fixed on the basis of the last 12-month average basic pay and DA.

The government's contribution to the employee's UPS account is 18.5 per cent, and the employee's minimum contribution is 10 per cent.

The pension can be more than the assured pension if the UPS investments perform well.

The UPS account holder will also get a lump sum amount at retirement.

It also has the provision of a family pension.

OPS: Pension on Rs 94,000 basic pay and 29 years of service   

We are calculating at a 53 per cent DA rate.

Rs 71,910

OPS: Family pension on Rs 94,000 basic pay and 29 years of service   

Rs 43,146

UPS: Pension on Rs 94,000 basic pay and 29 years of service   

Rs 71,910

UPS: Lump sum amount on Rs 94,000 basic pay and 29 years of service   

Rs 8,34,156

UPS: Family pension on Rs 94,000 basic pay and 29 years of service   

Rs 43,146

NPS: Pension on Rs 94,000 basic pay and 29 years of service   

Since NPS pension depends on the contribution.

It doesn't depend on the last-drawn basic pay and years of service.

But let's create a scenario where we assume that the person starts with a Rs 5,000 monthly NPS contribution and increases their amount by 5 per cent every year.

Let's see how much estimated corpus they may create and what their estimated monthly pension will be.

Here, the estimated return from NPS investment is 9.18 per cent, and the annuity return is 6.75 per cent. 

The total estimated corpus in 29 years will be Rs 1,30,35,099.

The maximum estimated monthly pension they can get from this corpus will be Rs 73,322.