UPS vs NPS: Since the launch of the Unified Pension Scheme (UPS), many government employees are wondering which option will give a better pension—UPS or NPS? If you prefer guaranteed income and want to avoid market risks, UPS could be a better fit.
But if you’re open to higher returns and understand stock market investments, then NPS might work better. So, should you switch from NPS to UPS? Where will you actually get more pension?
What is UPS?
The central government launched the Unified Pension Scheme (UPS) on August 24.
This scheme is meant for employees currently under the New Pension System (NPS), and it will also include retired NPS subscribers.
Government workers have long demanded a plan that offers a guaranteed monthly pension after retirement.
Should You Switch to UPS?
Experts say the decision depends on your financial goals and risk tolerance. If you have experience in the stock market and can stay invested for the long term, then NPS might offer better returns.
According to Dhirendra Kumar, CEO of Value Research, employees with 10–20 years left until retirement and an understanding of market risks can benefit more from NPS.
UPS Offers Guaranteed Pension
The main advantage of UPS is that it provides guaranteed pension.
The government promises that at retirement, UPS members will receive 50% of their average basic salary from the last 12 months as pension.
This is ideal for employees who want a stable, fixed income after retiring.
Suresh Sadagopan, CEO of Ladder7 Wealth Planners, says employees who want fixed income and low risk can consider switching from NPS to UPS.
UPS vs OPS: What’s the Difference?
Although UPS is often compared to the Old Pension Scheme (OPS), they are not the same.
Under OPS, the government paid the full pension, and employees didn’t need to contribute.
UPS, however, is a funded pension scheme. Here, employees contribute 10% of their salary plus DA, and the government contributes 18.5%.
Of the government’s share, 8.5% goes into a Guarantee Reserve Fund, which secures the guaranteed pension payout.
Can You Go Back to NPS After Choosing UPS?
No. The government has made it clear that once an employee switches to UPS, they cannot return to NPS. So, the choice must be made carefully.
The government is expected to release more details about UPS soon, which will help employees make a better decision.
