OPS vs NPS: Government employees will get 50 percent pension of basic pay, new proposal presented
OPS vs NPS: If you are an employee then this news is for you. Actually, let us tell you that government employees will get 50 percent pension of basic pay. According to a report, if it is implemented, it can benefit about 87 lakh central and state government employees who have been enrolled in NPS since 2004.

News, Digital Desk- The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government has offered significant improvements in pension benefits for central government employees under the National Pension System (NPS).
According to a report by Financial Express, the proposal is to ensure up to 50 per cent of the last basic pay as pension, which is a significant change from the current market-based return system.
T.V. Somanathan Pension Scheme Committee-
In March 2023, the Narendra Modi government set up a committee headed by Finance Secretary T V Somanathan to explore ways to improve pension benefits under the NPS to avoid a reversion to the non-contributory Old Pension System (OPS). The OPS has been deemed financially unviable. Many states have started abandoning the NPS and moving back to OPS.
The committee was not given any time frame for the task and comprised Radha Chauhan, Special Secretary in the Department of Expenditure, Ministry of Finance, Annie Mathew and Deepak Mohanty, Chairman of the Pension Fund Regulatory and Development Authority.
What is the Andhra Pradesh NPS model?
Under the Andhra Pradesh Guaranteed Pension System (APGPS) Act, 2023, where the annuity falls short, a top-up ensures that 50 per cent of the last basic pay is received as monthly pension.
In addition, the spouse of the deceased subscriber is assured of 60 per cent of the guaranteed amount as monthly pension.
Cost of living adjustments based on inflation will be applied to the final basic pay, as specified in the Act.
The APGPS Act also states that partial and final withdrawals will reduce the guaranteed pension proportionately, ensuring that the system remains sustainable and provides better benefits to retired employees.
What does this NPS proposal say?
The proposed scheme will guarantee 40-50 per cent of the last pay as pension, with adjustments based on years of service and any withdrawals from the pension fund.
Any shortfall in the pension fund to meet the guaranteed pension amount will be covered by the central government budget.
If implemented, it could benefit around 87 lakh central and state government employees who have been enrolled in the NPS since 2004.
While the exact cost of a guaranteed pension has not been determined, a Financial Express report suggests that investing the entire accumulated corpus in annuities or similar products can generate enough returns to provide 50 per cent of the pension wealth.
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Old Pension Scheme(OPS) Vs National Pension Scheme(NPS)-
Under OPS, pre-2004 government employees with at least 20 years of continuous service receive 50 per cent of their last pay as pension. Employees with 10-20 years of service get a pro-rata pension adjusted twice a year according to inflation.
In contrast, under the current NPS, a minimum of 40 per cent of the accumulated contributions must be invested in annuities to generate a monthly pension, which is not guaranteed and is subject to annuity returns. The remaining 60 per cent can be withdrawn without tax.
The proposed guaranteed pension option will modify these existing norms under NPS.