NPS vs OPS vs UPS

The Old Pension Scheme, the National Pension System and the Unified Pension Scheme are the three pension arrangements available to a central government employee, and which one applies is fixed by the date of appointment rather than by choice. The Old Pension Scheme (OPS) is a non-contributory defined benefit paying 50% of the last drawn basic pay under Rule 44(1) of the CCS (Pension) Rules, 2021, closed to anyone appointed on or after 1 January 2004 by Ministry of Finance notification F. No. 5/7/2003-ECB PR dated 22 December 2003. The National Pension System (NPS) is the contributory, market-linked scheme that replaced it for the later cohort: the employee pays 10% of basic pay plus dearness allowance, the government 14%, and the pension is whatever the accumulated corpus and the annuity rate produce. The Unified Pension Scheme (UPS), an option within NPS operative from 1 April 2025, restores an assured payout of 50% of the average basic pay of the last 12 months after 25 years of qualifying service, while keeping the funded, contributory structure.

What separates the three is who carries the investment and longevity risk. The Old Pension Scheme placed it entirely on the government, which paid a defined pension out of current revenue with no corpus set aside against it. The National Pension System moved it entirely to the employee, whose pension is the yield of an accumulated pot and whose government has discharged its obligation once the 14% is credited. The Unified Pension Scheme places it on a pooled corpus funded by the government at an estimated 8.5% of aggregate pay, subject to the employee’s own account keeping pace with a notional benchmark.

For a serving employee in 2026 the choice has already been made. The window for an NPS subscriber to opt into UPS closed on 30 November 2025 after two extensions, and 1,18,195 subscribers were enrolled as on 19 July 2026 against roughly 24 lakh NPS-covered central government employees. A new recruit still gets 30 days from the date of joining, and a UPS subscriber retains one chance to move back to NPS in a narrow window before retirement.

This article compares the three on every dimension that decides the outcome: who is on which, what the employee and the government contribute, the pension each pays and whether it is assured, the benchmark-corpus condition on the UPS assurance, the lump sum, dearness relief, the additional pension after 80, the family pension, early exit, and the treatment under the Income-tax Act, 2025. It sets out three worked scenarios on identical pay, lists the benefits that do not differ at all, and points to the calculators. Every figure that matters is cited to the governing rule, regulation or notification.

The three schemes at a glance

Eleven points separate the three schemes, and the table below sets them side by side. The sections that follow work through each row with its governing rule or regulation.

Who is on which scheme

The scheme follows from the date of appointment, and no central government employee chooses between OPS and the two later schemes. An employee appointed on or before 31 December 2003 is on the Old Pension Scheme, governed by the CCS (Pension) Rules, 2021. An employee appointed on or after 1 January 2004 is on the National Pension System, mandatory for that cohort other than the armed forces under Ministry of Finance notification F. No. 5/7/2003-ECB PR dated 22 December 2003. The dividing line is the date of appointment, not the length of service: an employee appointed on 31 December 2003 will draw half of last pay from the budget, and one appointed a day later builds a corpus.

The Unified Pension Scheme changed the position for the NPS cohort without reopening OPS. Operative from 1 April 2025, it is an option inside NPS rather than a replacement, and the option is final once exercised. Three categories could take it: employees in service under NPS on 1 April 2025, applying to the Head of Office in Form A-2; new recruits joining on or after that date, who apply in Form A-1 within 30 days; and past retirees who had already exited under NPS, along with the spouse of a deceased subscriber.

So the practical position in 2026 is three cohorts. Pre-2004 employees and pensioners sit on OPS, post-2004 employees who filed no option sit on plain NPS, and about 1.18 lakh subscribers sit on UPS. An employee appointed from 2004 cannot elect OPS on any ground under the rules, so the real choice, while the window was open, lay between NPS and UPS.

Why the Old Pension Scheme closed and the Unified Pension Scheme followed

The Old Pension Scheme was closed because its liability was unfunded: the pension of every serving employee fell on a future budget, with no corpus set aside against it during service. The scheme was the norm for every central government employee until the turn of the century, a defined benefit paid out of current revenue. As the retired population and life expectancy grew, that bill became a rising first charge on the exchequer. Ministry of Finance notification F. No. 5/7/2003-ECB PR dated 22 December 2003 closed the scheme to entrants from 1 January 2004 and put them on a defined-contribution scheme, then called the New Pension Scheme and later renamed the National Pension System. The reform converted an open-ended promise into a fixed contribution and moved the investment and longevity risk to the employee.

That transfer was contested for two decades. Employee associations campaigned to restore the Old Pension Scheme, and several state governments announced a return to it for their own staff. The central government did not reopen OPS. It approved the Unified Pension Scheme in August 2024, notified it by Ministry of Finance notification F. No. FX-1/3/2024-PR dated 24 January 2025, and operationalised it from 1 April 2025 through the PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 of 19 March 2025.

UPS is the settlement between the two positions. It restores the assured 50% that employees wanted and keeps the funded, contributory structure the exchequer needed, bridging them with a pooled corpus and a benchmark condition. Its own regulations treat it as an option within NPS rather than a fourth scheme.

Contributions to the three schemes

The schemes differ first in what goes in, and the government’s individual-account share is the figure most often reported wrongly. The Old Pension Scheme is non-contributory: the employee pays nothing towards the pension during service, and the government meets it from the current budget when it falls due. That is what makes OPS costless for the employee and expensive for the exchequer, and it is the reason it was closed.

The National Pension System is contributory at 10% and 14%. The employee contributes 10% of basic pay plus dearness allowance to the Tier-I account, and the government contributes 14% of the same base. The government’s share began at 10% when NPS started and was raised to 14% with effect from 1 April 2019 by Ministry of Finance, Department of Financial Services notification F. No. 1/3/2016-PR dated 31 January 2019. The base is basic pay plus DA alone, so house rent allowance and transport allowance are excluded, and the rupee contribution rises with every annual increment, every promotion and every dearness allowance revision, without any decision by the employee.

The Unified Pension Scheme keeps the employee at 10% and splits the government’s side. Regulation 6(1) of the PFRDA Regulations of 19 March 2025 fixes the employee’s contribution at 10% of basic pay plus dearness allowance, and regulation 6(2) requires the central government to match it with an equal 10% credit to the individual corpus. Regulation 7(1)(i) adds an estimated 8.5% of aggregate basic pay plus DA to a separate pool corpus that funds the assured payout. Total government outgo is therefore about 18.5%, higher than the 14% under plain NPS, while the share credited to the employee’s own account falls from 14% to 10%.

That reallocation of 4 percentage points, from the individual account to the pool, is the price of the guarantee. It is also the single most misreported figure in the scheme: summaries that quote 14% as the UPS individual-corpus rate are describing NPS. The 14% is restored only where the subscriber uses the one-time facility to switch back.

Account structure, investment choice and the provident fund

The Old Pension Scheme holds no account at all, while NPS and UPS both run on an individual Tier-I account, and that difference decides what an employee can see and control during service. The OPS pension is a promise, not a balance. Nothing accumulates in the employee’s name, and the entitlement is recorded on the pension payment order at retirement. Alongside it an OPS employee subscribes to the General Provident Fund, a separate saving into which only the employee contributes and which earns a government-declared quarterly rate, 7.1% for 1 July to 30 September 2026. An OPS employee therefore reaches retirement with two pots: the pension from the government, and the provident fund from their own saving.

NPS and UPS both run on the Tier-I account under a Permanent Retirement Account Number, held by the NPS Trust so that the money never sits on the balance sheet of any intermediary, and administered through a central recordkeeping agency. There is no General Provident Fund for that cohort; the Tier-I corpus takes its place. An NPS or UPS employee’s own retirement saving therefore sits inside the same account that also funds the pension, which is one reason the NPS lump sum looms so large in any comparison. An optional Tier-II account is available as a savings add-on with no lock-in and no tax benefit for a government subscriber.

Investment choice is wider under NPS than under UPS. About 96% of central government NPS subscribers sit in the Default Scheme, which PFRDA allocates among the pension funds of the State Bank of India, the Life Insurance Corporation and UTI, with equity capped at 25% since 1 April 2025. A subscriber who leaves the default may pick another option and any of the pension funds registered with PFRDA. Under the Unified Pension Scheme, regulation 11(4) of the PFRDA Regulations of 19 March 2025 offers exactly three alternatives to the default pattern: 100% in government securities under Scheme G, the Conservative Life Cycle Fund with equity capped at 25%, or the Moderate Life Cycle Fund. The narrower menu follows from the benchmark, because the benchmark corpus is computed on the default pattern and a subscriber who departs from it carries the difference either way.

The pension: assured against market-linked

OPS and UPS both pay about half of pay for life, while NPS fixes no percentage at all and pays whatever the corpus and the annuity rate produce. Under the Old Pension Scheme the pension is 50% of emoluments, meaning the last drawn basic pay, or 50% of the average emoluments of the last 10 months if that is more beneficial, under Rule 44(1) of the CCS (Pension) Rules, 2021, for an employee with at least 10 years of qualifying service. It is bounded by a floor of Rs. 9,000 a month and a ceiling of Rs. 1,25,000 a month, both applied to basic pension before dearness relief. Full pension has not been linked to 33 years of qualifying service since 1 January 2006, following Department of Pension and Pensioners’ Welfare Office Memorandum No. 38/37/08-P&PW(A) dated 10 December 2009.

Under the National Pension System there is no assured pension and no defined share of pay. At superannuation at least 40% of the accumulated pension wealth must buy an annuity from a PFRDA-empanelled insurer under the PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, and the annuity rate available on the day of purchase sets the monthly figure. Two variables decide it: the corpus reached at retirement and the rate on offer. A market fall in the years immediately before retirement lowers the corpus and, through it, the pension for life.

Under the Unified Pension Scheme the assurance returns, on a formula. Regulation 15(1)(i) of the PFRDA Regulations of 19 March 2025 sets the assured payout as A = (P divided by 2) multiplied by (Q divided by 300), where P is the average basic pay of the last 12 months certified by the Head of Office and Q is qualifying service in months, capped at 300. At 25 years or more the ratio is 1, so the payout is half of P. At 15 years it is 180/300, or 30% of P. Regulation 15(1)(ii) sets a floor of Rs. 10,000 a month where qualifying service is at least 120 months, with dearness relief added on top of the floor.

For a full career the practical read is that OPS and UPS land close to each other, both near half of pay, while the NPS pension is generally lower on the same career, because only 40% of the corpus is annuitised and the annuity is bought at the market rate. The OPS vs NPS vs UPS calculator computes all three from one set of figures.

The benchmark corpus, the condition on the UPS assurance

The UPS assured payout is a ceiling rather than a promise: it is paid in full only where the individual corpus matches a notional benchmark corpus on the date of exit. Regulation 12 of the PFRDA Regulations of 19 March 2025 requires the central recordkeeping agency to compute that benchmark corpus monthly. It is the value the individual account would have reached had every employee and employer contribution been received on time for each month of qualifying service and invested in the default pattern, with no partial withdrawals.

Regulation 11(7) makes the subscriber entitled to any surplus of the individual corpus over the benchmark and liable for any shortfall against it. Where the individual corpus falls short and the shortfall is not made good, regulation 15(1)(iv) reduces the payout in the same proportion, and the reduction runs for life: an account at 90% of its benchmark draws 90% of the assured payout. A shortfall may be replenished at any time up to the date of retirement.

Three things push an account below its benchmark. Contributions missed or credited late are the commonest. An investment choice other than the default that underperforms it is the second, since regulation 11(7) leaves that difference with the subscriber. The third is a partial withdrawal, because regulation 12(4)(i) excludes partial withdrawals from the benchmark computation while they do come out of the individual corpus, and regulation 18(5) accordingly allows a subscriber to replenish the value of a withdrawal before the date of retirement. For an employee with a full record of default contributions and no withdrawals, the individual corpus tracks the benchmark and the assured 50% is paid in full.

The lump sum at retirement

All three schemes put cash in the retiree’s hands at exit, by three different routes, and only under NPS does the lump sum come out of the money that would otherwise pay the pension. Under the Old Pension Scheme there is no separate lump sum on the pension side. The only route is commutation, exchanging up to 40% of the basic pension for a one-time amount under Rule 5(1) of the CCS (Commutation of Pension) Rules, 1981, which reduces the monthly pension for 15 years until it is restored. The commuted value is relieved in full, with no monetary ceiling, as a deduction from salary under serial 7 of the Table in Section 19(1) of the Income-tax Act, 2025. It is a trade rather than an addition: pension is surrendered to obtain it. The OPS retiree’s other lump sum is the accumulated General Provident Fund balance, and the commutation of pension calculator works out both the amount and the reduction.

Under the National Pension System the lump sum is large and comes straight out of the pension corpus. At superannuation up to 60% of the accumulated pension wealth may be taken in cash, with at least 40% buying the annuity. The PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025, dated 12 December 2025 and gazetted on 16 December 2025, eased the small-corpus relief: a corpus up to Rs. 8 lakh may be taken in full with no annuity at all, and between Rs. 8 lakh and Rs. 12 lakh up to Rs. 6 lakh may be taken as a lump sum with the balance drawn down over at least six years. Over a full career the corpus can run to several crore, so the 60% is the headline attraction of NPS, and it is also why the NPS monthly pension is lower: every rupee taken in cash is a rupee not annuitised. The 80:20 option introduced by the same amendment, widely reported as allowing 80% of the corpus in cash, does not reach central government employees; its scope is the All Citizen model, the corporate sector and individuals joining after the age of 60.

Under the Unified Pension Scheme the lump sum is a defined benefit that does not touch the payout. Regulation 14(1) of the PFRDA Regulations of 19 March 2025 fixes it at one-tenth of the last drawn basic pay plus dearness allowance on it, for each completed six-month period of qualifying service, and regulation 14(3) states expressly that it is in addition to the assured payout and does not affect its quantum. Thirty years of service is 60 completed six-month periods, so the lump sum is six times monthly emoluments. Unlike the assured payout it is not capped at 300 months, so it keeps growing with every completed six-month period beyond 25 years.

A UPS subscriber may also take a final withdrawal from the individual corpus, and that one does cut the payout. Regulation 15(2) allows up to 60% of the individual corpus or the benchmark corpus, whichever is lower, and regulation 15(1)(iv) then reduces the monthly payout by the same percentage. A subscriber who takes the full 60% draws 40% of the assured payout for life. The regulation 14 lump sum and the final withdrawal are different things: the first is free, the second is paid for.

Dearness relief and inflation protection

Dearness relief is the difference that compounds, because the OPS and UPS pensions are indexed twice a year and the NPS annuity is not indexed at all. The Old Pension Scheme and the Unified Pension Scheme both carry dearness relief, revised on the same basis and at the same rate as the dearness allowance of serving employees. At the rate of 60% in force from 1 January 2026, an OPS or UPS basic pension of Rs. 50,000 is Rs. 80,000 in hand, and it moves again with every subsequent order.

The National Pension System annuity carries no dearness relief. The annuity the corpus buys pays a level amount for life, unless the retiree chose and paid for an increasing annuity, which starts lower for the same purchase price. Over a retirement of 25 years the two assured pensions keep pace with the consumer price index that drives dearness allowance while the NPS annuity stands still, so a comparison drawn on the first month’s pension understates the gap. This is the least visible difference between the schemes and the largest in cumulative rupees.

Additional pension after the age of 80

Only the Old Pension Scheme raises the pension with the pensioner’s age, and neither NPS nor UPS has an equivalent. Rule 44(6) of the CCS (Pension) Rules, 2021 adds 20% of the basic pension on completion of 80 years of age, 30% at 85, 40% at 90, 50% at 95 and 100% at 100, so the basic pension doubles for a pensioner who reaches a hundred. The addition is computed on basic pension and dearness relief then applies to the enlarged figure, so an OPS pensioner at the Rs. 1,25,000 ceiling who completes 80 draws Rs. 1,50,000 before dearness relief.

The rule operates on a pension fixed under Rule 44, which is the Old Pension Scheme pension. The National Pension System annuity and the Unified Pension Scheme assured payout are fixed under their own frameworks and take no age-related increase. For a pensioner who lives into the nineties this widens the gap between OPS and the two later schemes long after retirement, and no comparison drawn at the date of retirement shows it. The full rule, including the settled point that the increase starts on completing 80 years and not on entering the 80th year, is in additional pension in old age.

Family pension

OPS and UPS both define what the family receives, at 30% and 60% of their respective bases, while NPS defines nothing and leaves the outcome to the annuity variant chosen at exit. The Old Pension Scheme pays an ordinary family pension of 30% of the last pay, enhanced to 50% for the first ten years after a death in service or seven years after retirement, under Rule 50 of the CCS (Pension) Rules, 2021, subject to the same Rs. 9,000 floor and carrying dearness relief.

The Unified Pension Scheme pays 60% of the payout the pensioner was drawing, for the life of the spouse, with dearness relief. Measured against pay that is 60% of 50%, or 30% of the last 12 months’ average basic pay, the same proportion as OPS on a different base. The family pension calculator works out the OPS figure.

The National Pension System has no defined family pension. What the family receives depends on the residual corpus and on the annuity variant purchased at exit. The government-sector default is a life annuity that continues in full to the spouse on the subscriber’s death and returns the purchase price to the nominee after both, so the default protects the spouse; a single-life annuity bought instead pays more each month and stops with the pensioner. The choice is made once, at exit, and cannot be revisited afterwards.

Early exit: resignation, voluntary retirement and premature exit

An employee who leaves before superannuation is treated most harshly under the Old Pension Scheme and most protectively under NPS, and the Unified Pension Scheme sets a 25-year threshold that most early leavers will not clear. Under the Old Pension Scheme a monthly pension needs 10 years of qualifying service. An employee who resigns before that receives a service gratuity instead, and a resignation, as distinct from a retirement, forfeits past service altogether unless it is a technical resignation to take up another government post. Voluntary retirement and premature retirement under Fundamental Rule 56(j) both carry the full Rule 44 pension.

Under the National Pension System an early exit preserves the money but restricts the cash. A premature exit reverses the split: at least 80% of the corpus must buy an annuity and up to 20% may be taken as a lump sum, because the purpose of the account is a pension rather than an early withdrawal. A corpus up to Rs. 5 lakh, raised from Rs. 2.5 lakh by the amendment dated 12 December 2025, may be taken in full. All four exit routes, and the partial withdrawal of up to 25% of the employee’s own contributions available during service, are set out in the NPS exit rules.

Under the Unified Pension Scheme the assured payout needs 25 years and starts late. Regulation 13(1)(c) of the PFRDA Regulations of 19 March 2025 makes UPS benefits available on voluntary retirement only after a minimum qualifying service of 25 years, and even then the monthly payout begins on the date the employee would have superannuated had service continued, not on the date of retirement. Retirement under Fundamental Rule 56(j) is treated as a full exit under regulation 13(1)(b), on the condition repeated throughout the regulations that it must not be a penalty under the CCS (CCA) Rules, 1965. An employee who leaves earlier than the 25-year mark falls back on the NPS withdrawal rules for the accumulated corpus.

The ranking therefore reverses with career length. For an employee likely to leave government mid-career the two funded schemes return an accumulated corpus while the Old Pension Scheme returns only a service gratuity. For an employee certain to serve to superannuation, the ranking flips and OPS is worth the most.

Tax treatment under the Income-tax Act, 2025

All three schemes are taxed under the Income-tax Act, 2025, which repealed the Income-tax Act, 1961 by Section 536(1) with effect from 1 April 2026, and the differences sit on the contribution side rather than the pension side, since every monthly pension is charged as salary. Under the Old Pension Scheme the employee contributes nothing, so there is no deduction to claim during service. The pension is charged as salary in retirement under Section 15, and the commuted value is relieved in full as a deduction under serial 7 of the Table in Section 19(1).

Under the National Pension System three reliefs are available on the contribution side and only one survives the new regime. The employee’s own 10% is deductible under paragraph 1(y) of Schedule XV, within the Rs. 1,50,000 ceiling of Section 123, with a further Rs. 50,000 under Section 124(3). The government’s contribution is deductible under Section 124(1)(a) up to 14% of salary, and that employer deduction is the only one of the three available under the new tax regime. At exit the lump sum is excluded from total income by serial 6 of the Table in Schedule II, but only to the extent of 60% of the total amount payable, and the annuity pension is charged in the year of receipt under Section 124(6)(b). The NPS tax benefits article works through all three reliefs and the regime interaction.

Under the Unified Pension Scheme the treatment matches NPS, by statute since 21 August 2025. Serial 15 of the Table in Schedule II excludes the final withdrawal up to 60% of the individual corpus and serial 16 excludes the regulation 14 lump sum. The employee’s own 10% is deductible under paragraph 1(y) of Schedule XV. Section 124(12) deems the subscriber not to have received anything where the individual corpus is transferred to the pool corpus under regulation 19(3), which is what keeps that transfer outside the charge, and the monthly payout is taxable as pension. The alignment was made by the Taxation Laws (Amendment) Act, 2025 through Sections 10(12AA), 10(12AB) and 80CCD(3A) of the 1961 Act, and it carried into the corresponding provisions of the 2025 Act on repeal. For the wider picture see income tax for government employees.

Benefits that do not differ between the schemes

Retirement gratuity, the health scheme and leave encashment are identical under all three schemes, so a head-to-head that lists any of them on one side is wrong. Retirement gratuity is payable under all three, at one-fourth of basic pay plus dearness allowance for each completed six-month period, capped at Rs. 25 lakh since 1 January 2024. OPS retirees take it under Rule 45 of the CCS (Pension) Rules, 2021, and NPS and UPS subscribers under the CCS (Payment of Gratuity under NPS) Rules, 2021. Death gratuity extends to a UPS subscriber discharged from service on invalidation, per Department of Pension and Pensioners’ Welfare Office Memorandum No. 57/03/2022-P&PW(B)/8361(8) dated 29 October 2025. The gratuity calculator computes the figure for any of the three.

Leave encashment at retirement, up to 300 days of earned leave and half pay leave together under Rule 39 of the CCS (Leave) Rules, 1972, and membership of the Central Government Health Scheme, both follow from service and pay level rather than from the pension scheme. So does the pay matrix cell that fixes basic pay, which is the base of the OPS pension, of the UPS payout, and of both sets of contributions.

The one retirement saving that does differ is the General Provident Fund, open only to the OPS cohort. Its absence for the NPS and UPS cohort is why the Tier-I corpus carries a double load, as retirement saving and as pension funding at the same time.

Switching between the schemes

The only switch ever offered ran from NPS to UPS, that window closed on 30 November 2025, and the only move left is a one-time return from UPS to NPS in a narrow pre-retirement window. No route under the rules leads back to the Old Pension Scheme. An employee appointed on or after 1 January 2004 cannot elect OPS, and the scheme has not been reopened to any civilian cohort.

One claim on OPS is stayed rather than lost, and it sits in litigation rather than in the rules. The Delhi High Court held in January 2023, on petitions by CRPF, SSB, CISF and ITBP personnel, that the Old Pension Scheme applied to central armed police forces personnel recruited against advertisements issued while that scheme was in force. The Supreme Court stayed the direction on 5 July 2023 and directed the petitioners to abide by Department of Pension and Pensioners’ Welfare Office Memorandum No. 57/05/2021-P&PW(B) dated 3 March 2023. Until the appeal is decided, the National Pension System governs that group.

The NPS to UPS window closed on 30 November 2025 after two extensions. The PFRDA Regulations of 19 March 2025 originally allowed three months, to 30 June 2025. An Office Memorandum of 1 July 2025 extended it to 30 September 2025, and Department of Financial Services order File No. 11/14/2025-PR dated 30 September 2025 extended it a second time to 30 November 2025. An employee who filed no option remains on plain NPS with no further opportunity, and a new recruit joining on or after 1 April 2025 gets 30 days from the date of joining.

The switch back from UPS to NPS is one-time and available only at fixed points. The CCS (Implementation of Unified Pension Scheme under National Pension System) Rules, 2025 allow it within 12 months before the date of superannuation, within three months before the deemed date of voluntary retirement, or at resignation or non-penal compulsory retirement. On the switch the government contribution to the individual account returns to 14%. A subscriber who switches back cannot return to UPS.

For the NPS cohort in 2025 the decision came down to whether the assured 50% was worth 4 percentage points of government contribution diverted from the individual account to the pool. An employee who expected a full career of default contributions, valued an indexed pension and wanted a defined payout for the spouse gained from UPS. An employee who expected strong market returns, wanted the full 60% lump sum, or valued control of the account had reason to stay. The window has closed, so the live question now belongs to new recruits and to UPS subscribers weighing the one-time return.

Take-up of the Unified Pension Scheme

A small minority of the eligible cohort took the Unified Pension Scheme. 1,22,123 employees, new recruits and past retirees had opted in on the closing date of 30 November 2025, and the number of subscribers stood at 1,18,195 on 19 July 2026, per a written reply in the Lok Sabha. Against roughly 24 lakh NPS-covered central government employees that is under 5%.

The trajectory during the window explains the two extensions. About 31,555 employees had opted as on 20 July 2025, roughly three months into the original window, and about 1 lakh by the first extended deadline of 30 September 2025. Take-up on that scale is a datum in the comparison, though a weak one: the default for anyone who filed no option was to remain on NPS, so inaction and deliberate preference produce the same number.

Relative value of the three schemes

The Old Pension Scheme is worth the most to the employee and is closed; between the two open schemes, UPS wins on assured monthly income and NPS wins on cash at retirement and on control. The Old Pension Scheme pays half the last pay, indexes it with dearness relief, raises it again after 80, pays the family 30%, and allows commutation, all for no contribution at all. If it were open it would win for almost every employee. It is closed to anyone appointed from 1 January 2004, so for that cohort the comparison is NPS against UPS.

The Unified Pension Scheme is the choice for a predictable retirement income. It assures 50% of the last 12 months’ average basic pay after 25 years of qualifying service, indexes it with dearness relief, adds a regulation 14 lump sum that does not reduce it, and pays the spouse 60% for life. The costs are the employee’s 10%, the loss of 4 percentage points of government credit to the individual account, and the benchmark-corpus condition.

The National Pension System is the choice for cash and control. It assures nothing and its annuity is level for life, but it credits 14% to the employee’s own account, allows a wider investment choice across the registered pension funds, and pays up to 60% of the corpus as a lump sum excluded from total income.

The break-even is not a single number, and the logic is short. NPS wins only if the corpus, built partly on that extra 4%, grows enough to buy an annuity that beats an inflation-linked half of pay for life. The government-sector default caps equity at 25% and weights the rest to government securities and corporate bonds, and the NPS annuity takes no dearness relief while the two assured payouts do, so on monthly income across a long retirement the assured schemes are hard to beat. Where NPS pulls ahead is on total cash at exit and on flexibility, since the corpus is the employee’s own account and passes to the nominee. The choice turns on which of the two the retiree needs more: a higher indexed monthly income, which points to UPS, or a larger one-time sum with market upside, which points to NPS.

Three worked scenarios

On identical pay and service, OPS and UPS both pay Rs. 1,60,000 a month in hand, while NPS pays less each month and hands over by far the largest lump sum. Take three employees, each retiring at 60 with a final basic pay of Rs. 2,00,000 a month, 30 years of qualifying service, and dearness relief at 60%. They differ only in the scheme they are on.

Under the Old Pension Scheme the basic pension is 50% of Rs. 2,00,000, that is Rs. 1,00,000 a month, and dearness relief at 60% brings it to Rs. 1,60,000 in hand. It rises with every subsequent dearness-relief order, and again by 20% of basic pension on completion of 80 years. The lump sum is the accumulated General Provident Fund balance, with the option to commute up to 40% of the pension for cash up front against a reduced pension for 15 years. The employee contributed nothing towards the pension.

Under the Unified Pension Scheme the assured payout is the same Rs. 1,00,000, and Rs. 1,60,000 in hand with dearness relief, provided the individual corpus matches its benchmark on the date of exit. The regulation 14 lump sum is one-tenth of emoluments of Rs. 3,20,000, that is Rs. 32,000, multiplied by 60 completed six-month periods, or Rs. 19,20,000, paid over and above the payout and without reducing it. The employee contributed 10% of pay throughout to reach the same monthly figure, and the pension does not rise after 80.

Under the National Pension System the same career on the same pay builds a corpus whose size no rule fixes. Up to 60% of whatever it reaches is a lump sum excluded from total income, and the remaining 40% buys an annuity that is level for life and carries no dearness relief. The monthly figure depends entirely on the corpus at retirement and the annuity rate on the day of purchase, so no percentage of pay can be quoted for it. The NPS retiree ends with more cash at retirement than either of the others and a monthly pension that does not move for the rest of the retirement.

The OPS vs NPS vs UPS calculator computes all three for any pay and length of service, and shows how far the NPS outcome moves with the assumed return and annuity rate.

The 8th Central Pay Commission and the three schemes

The 8th Central Pay Commission moves the base of all three schemes without changing any of their rules, because every figure in this comparison rests on basic pay. The OPS pension is half of basic pay, the UPS payout is half of the last 12 months’ average basic pay, and both sets of contributions are a percentage of basic pay plus dearness allowance. A revised pay matrix therefore moves all three in the same direction, with no amendment to the CCS (Pension) Rules, 2021 or to the PFRDA regulations.

Nothing in the terms of reference of the 8th Central Pay Commission commits it to change the 10%, 14% or 18.5% contribution rates, and no figure for any of them, or for a fitment factor, should be treated as settled before the Commission reports. Until then the current pay matrix drives both the contributions and the assured-payout base.

Calculators for the three schemes

The outcome turns on pay, on length of qualifying service and, for NPS alone, on assumptions about return and annuity rate, so the comparison is worth running on actual figures. The OPS vs NPS vs UPS calculator puts all three side by side from one set of inputs.

The scheme-specific tools go further: the Rule 44 pension calculator for the OPS pension, the UPS payout calculator for the assured payout and the regulation 14 lump sum, the NPS corpus calculator for the projected corpus and the pension it buys, the commutation of pension calculator for the OPS commuted value, the gratuity calculator for the gratuity common to all three, and the GPF calculator for the provident fund available to the OPS cohort alone.

Related Articles

• Old Pension Scheme
• National Pension System
• Unified Pension Scheme
• Central government pension
• CCS (Pension) Rules, 2021
• Qualifying service
• NPS exit rules
• NPS tax benefits
• General Provident Fund
• Commutation of pension
• Family pension
• Additional pension in old age
• Service gratuity
• Gratuity for central government employees
• Death gratuity
• Dearness relief
• Dearness allowance
• Superannuation
• Retiring pension
• Voluntary retirement
• Premature retirement
• Resignation from government service
• Technical resignation
• Invalid pension
• CCS (CCA) Rules, 1965
• Leave encashment
• Central Government Health Scheme
• Central armed police forces
• One Rank One Pension
• Income tax for government employees
• Income-tax Act, 2025
• New tax regime
• Pay matrix
• Annual increment
• House rent allowance
• Transport allowance
• 7th Central Pay Commission
• 8th Central Pay Commission
• Central government employees in India
• Pay fixation
• Department of Personnel and Training
• Department of Expenditure
• OPS vs NPS vs UPS calculator
• Rule 44 pension calculator
• UPS payout calculator
• NPS corpus calculator
• Commutation of pension calculator
• Family pension calculator
• Gratuity calculator
• GPF calculator

External references

• Department of Pension and Pensioners’ Welfare
• Pension Fund Regulatory and Development Authority
• Department of Financial Services
• Central Record Keeping Agency, NPS Trust
• Department of Expenditure
• Central Pension Accounting Office
• Income Tax Department

References

1. Central Civil Services (Pension) Rules, 2021, notified as G.S.R. 868(E) on 20 December 2021: Rule 44(1) (pension at 50% of emoluments, floor Rs. 9,000, ceiling Rs. 1,25,000), Rule 44(6) (additional pension after 80), Rule 45 (retirement gratuity), Rule 50 (family pension).
2. Ministry of Finance notification F. No. 5/7/2003-ECB PR dated 22 December 2003, closing the Old Pension Scheme to employees appointed on or after 1 January 2004.
3. Department of Pension and Pensioners’ Welfare Office Memorandum No. 38/37/08-P&PW(A) dated 10 December 2009, dispensing with the linkage of full pension to 33 years of qualifying service with effect from 1 January 2006.
4. Ministry of Finance, Department of Financial Services notification F. No. 1/3/2016-PR dated 31 January 2019, raising the government NPS contribution to 14% of basic pay plus dearness allowance from 1 April 2019.
5. PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, as amended by the Amendment Regulations dated 12 December 2025 (F. No. PFRDA/16/14/06/0009/2018-REG-EXIT), gazetted on 16 December 2025: the 60:40 superannuation exit, the 20:80 premature exit, small-corpus relief at Rs. 8 lakh and Rs. 5 lakh, and partial withdrawal.
6. Ministry of Finance notification F. No. FX-1/3/2024-PR dated 24 January 2025 notifying the Unified Pension Scheme; PFRDA (Operationalisation of Unified Pension Scheme under National Pension System) Regulations, 2025 dated 19 March 2025: regulation 6 (contributions), regulation 7 (pool corpus), regulation 11 (investment choice, surplus and shortfall), regulation 12 (benchmark corpus), regulation 13 (eligibility), regulation 14 (lump sum), regulation 15 (assured payout and final withdrawal), regulation 18 (partial withdrawal), regulation 19 (transfer to the pool corpus).
7. Central Civil Services (Implementation of Unified Pension Scheme under National Pension System) Rules, 2025, dated 2 September 2025, including the one-time switch back to the National Pension System.
8. Ministry of Finance, Department of Financial Services order File No. 11/14/2025-PR dated 30 September 2025, extending the date for exercising the Unified Pension Scheme option to 30 November 2025.
9. Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021; Department of Pension and Pensioners’ Welfare Office Memorandum No. 57/03/2022-P&PW(B)/8361(8) dated 29 October 2025 on death gratuity for Unified Pension Scheme subscribers.
10. Department of Pension and Pensioners’ Welfare Office Memorandum No. 57/05/2021-P&PW(B) dated 3 March 2023, referred to in the Supreme Court order of 5 July 2023 staying the Delhi High Court direction on the Old Pension Scheme for central armed police forces personnel.
11. Income-tax Act, 2025: Section 19(1) Table serial 7 (commuted pension), Schedule II Table serial 6 (National Pension System lump sum), Schedule II Table serials 15 and 16 (Unified Pension Scheme), Sections 123 and 124 and Schedule XV paragraph 1(y) (contributions and deductions), Section 536(1) repealing the Income-tax Act, 1961 with effect from 1 April 2026; Taxation Laws (Amendment) Act, 2025, assented 21 August 2025.