Old Pension Scheme: NPS is a defined contribution scheme that allows individuals to invest in various types of pension funds. The scheme is open to all citizens of India between the age of 18 to 60 years. The government does not provide any guaranteed pension under NPS. Instead, the pension received is based on the investment returns generated by the fund.
The Government of India introduced a new pension scheme for its citizens in 2003, known as the National Pension System (NPS) and it came into force the following year. The objective of NPS is to provide defined contribution pension to the citizens of the country. The new scheme was launched as an alternative to the existing Old Pension Scheme (OPS) and aims to provide a more secure and stable retirement income for the citizens of the country. Here we will take a closer look at the differences between NPS and OPS.
Pension scheme
NPS is a defined contribution plan that allows individuals to invest in various types of pension funds. The scheme is open to all citizens of India between the age of 18 to 60 years. Government does not provide any guaranteed pension under NPS. Instead, the pension received is based on the investment returns generated through the fund. The plan also provides a life insurance cover of Rs 5 lakh for the subscriber.
Old pension scheme
On the other hand, OPS is a defined benefit scheme which provides pension based on the last salary and number of years of service of the individual. The scheme is open to government employees who have completed at least 10 years of service. Under OPS, the government provides a guaranteed pension which is based on the last drawn pay and number of years of service of the individual.
The major difference between NPS and OPS is the level of guaranteed pension provided. NPS does not provide any guaranteed pension, while OPS provides guaranteed pension based on the last drawn pay and number of years of service of the individual. This makes OPS a more secure and stable option for those looking for a guaranteed pension in their retirement.
Another important difference between the two plans is the age limit. NPS is open to citizens between 18 and 60 years of age, while OPS is open to government employees who have completed at least 10 years of service. This makes OPS a more suitable option for government employees who want to plan for their retirement.
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