As of now, there are two pension schemes: Old Pension Scheme (OPS), which is applicable to employees that joined before 2004; and National Pension System (NPS), which is applicable to employees that joined post-2004. The OPS offers defined benefits, whereas the NPS offers market-linked returns. Now the government has approved the UPS, which will give employees benefits similar to the OPS and much better than the NPS.

How OPS, NPS and UPS differ

A central government employee will have to contribute 10% under the UPS. This was not the case under the OPS as the Centre bore the entire amount, but this 10% was introduced under the NPS.
There will be an assured pension amount under the UPS like under the OPS. Also, the pension amount will increase as per inflation index like under the OPS. The pension amount is not dependent on market vagaries as it is in case of the NPS.
Government contribution under the NPS was 14%. Now, under the UPS, it has been hiked to 18.5%. So, the government is taking on the extra burden.
The main difference in the UPS is that it is both a funded and a contributory scheme, plus offers an assurance on pension amount.
The move will benefit 2.3 million central government employees. If the states take this route as well, a total of 9 millionemployees could benefit, who are currently under the NPS. All BJP-led states would likely adopt the UPS soon.
Employees have been offered the option to switch to UPS by April 1, 2025, like those who were under the NPS since 2004. Arrears will be paid to them as well.

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