New Delhi: With the Unified Pension Scheme (UPS) officially operational since April 2025, Central Government employees retiring in 2026 are evaluating whether to switch from the National Pension System (NPS) to UPS. While unions continue to demand the restoration of the Old Pension Scheme (OPS) in the 8th Pay Commission, the current choice is strictly between UPS and NPS, though a comparison with OPS reveals the “gap” in benefits.
VERDICT 2026: For employees with 25+ years of service, OPS remains superior because it is non-contributory and calculates pension on “Last Drawn Pay.” However, UPS is statistically better than NPS for 90% of cadres, offering a guaranteed 50% pension, though it still requires a 10% salary contribution.
1. UPS vs OPS: The 2026 Comparison Table
| Feature | Old Pension Scheme (OPS) | Unified Pension Scheme (UPS) |
|---|---|---|
| Pension Amount | 50% of Last Drawn Pay | 50% of Average Pay (Last 12 Months) |
| Employee Contribution | ZERO (0%) | 10% of Basic + DA |
| Govt Contribution | Nil (Pay-as-you-go) | 18.5% |
| Minimum Service | 20 Years (for 50%) | 25 Years (for 50%) |
| Inflation Index | Linked to DR (Dearness Relief) | Linked to DR (Dearness Relief) |
| Commutation | Up to 40% allowed | Lump Sum (1/10th of Pay + Gratuity) |
2. The “Math” for a 2026 Retiree
Let us calculate the loss/gain for a Level-7 Officer retiring in Jan 2026.
- Last Basic Pay: ₹60,000
- Last 12-Month Average: ₹58,500
Under OPS:
Pension = 50% of ₹60,000 = ₹30,000
Cost to Employee: ₹0
Under UPS:
Pension = 50% of ₹58,500 = ₹29,250
Cost to Employee: 10% of salary deducted every month for 25 years.
3. Why Unions Reject UPS
While UPS is safer than NPS (which is market-linked), the All India Railwaymen’s Federation (AIRF) argues that UPS is still “contributory.” The demand placed before the Cabinet Secretary for the 8th Pay Commission is to remove the 10% contribution clause, effectively converting UPS into OPS.
4. Conclusion
Employees currently in NPS are advised to switch to UPS immediately to secure the “Assured Pension” guarantee. However, the fight for the non-contributory OPS continues under the JCM (Staff Side) agenda for the 8th CPC.
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