NPS vs UPS: Key Takeaways

Author: Choudhury Mohammad Ikbal Bahar Yousuf, Circle Secretary, NUPE Postman MTS, Assam Circle, Karimganj HQ.

Understanding NPS & UPS

For employees confused between NPS (National Pension System) and UPS (Union Pension Scheme), here is a simplified explanation.

If an employee completes their entire 30-year service under NPS, then NPS is the better choice.
If an employee serves only 10-12 years and becomes permanent, they should opt for UPS.

Assume at the time of retirement, your basic salary is ₹2,00,000:

You can withdraw 60% of the NPS corpus as a lump sum.
The remaining 40% must be used for a pension plan.
The lump sum can be invested in:
- SCSS (Senior Citizen Savings Scheme)
- SWP (Systematic Withdrawal Plan)
- MIS (Monthly Income Scheme)

At retirement, if 60% withdrawal = ₹2 crores, withdrawing ₹2 lakh/month allows sustenance for at least 10 years.
Due to compounding, the next ₹1 crore will grow faster.
India’s average life expectancy is 67-70 years, making long-term planning crucial.

The Government has set a deadline of June 30 for migrating from NPS to UPS. After this, switching will no longer be allowed.

Make a responsible decision based on your risk preference.