UPS vs NPS- Which scheme will be best for you, know full details

Friends, human life is full of uncertainties, where anything can happen at any time and if you are a working person and are thinking about your retirement, then to reduce your worry, the Central Government has announced the Unified Pension Scheme (UPS) on 24 August, which meets the long-standing demand of employees for guaranteed pension income after retirement. This new scheme will be available only to those employees who are currently part of the New Pension System (NPS), including retired members. Let us know which of the two will benefit you-

1. What is the Unified Pension Scheme (UPS)?

UPS provides a guaranteed pension equal to 50% of the average basic salary of the last 12 months before retirement.

Only existing NPS members (including retired members) can opt for it.

Once you switch to UPS, you cannot switch back to NPS.

2. UPS vs NPS – Which one should you choose?

NPS:

Suitable for employees who can handle market risks and want high returns linked to the stock market.

Best for those who have 10-20 years left before retirement, as long-term investments can provide better growth rates.

UPS:

Best for employees who want stable, guaranteed income without worrying about market fluctuations.

Ensures financial security by providing a fixed pension.

3. How is UPS different from Old Pension Scheme (OPS)?

Unlike OPS, UPS is fully funded and not entirely borne by the government.

Employee contribution: 10% of basic pay + dearness allowance (DA).

Government contribution: 18.5% of basic pay + dearness allowance (DA), while in NPS it is 14%.

Of this, 8.5% goes to the Guarantee Reserve Fund to ensure the promised pension.

4. How does OPS work?

Employees do not contribute directly to OPS (except GPF).

The pension is based on the last salary drawn and is fully funded by the government, which covers all risks including inflation and longevity.

5. Should you switch to UPS?

Experts suggest that the choice depends on your goals:

If you believe in India's economic growth and can handle the ups and downs of the stock market, NPS may offer better returns in the long term.

If you prefer certainty and stability over potentially higher but riskier returns, UPS ensures a stable pension (50% of your last basic salary).