The NPS vs OPS debate is now politically charged up. The Punjab Government recently announced its plan to implement the old pension scheme (OPS) by replacing the National Pension Scheme (NPS) being implemented since 2004. Several other states are also playing with the idea of reverting to OPS.
While the debate may continue for a long time, here’s a look at the most important differences between OPS and NPS and how the funds managed under the latter scheme for state and central government employees have performed in the last 5 and 10 years.
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OPS vs NPS: Difference
National Pension Scheme replaced the OPS with effect from April 1, 2004. Under the old pension scheme, retired employees received 50% of their last drawn salary as monthly pensions. In contrast, NPS is a contributory pension scheme under which employees contribute 10% of their salary (Basic + Dearness Allowance) and the Government contributes 14% towards the employees’ NPS accounts.
The funds under NPS are managed by PFRDA-approved pension fund managers. The onus of purchasing the annuity plan from approved pension providers is on the employee under NPS. At the time of retirement, employees are required to purchase an annuity plan for a monthly pension with a minimum of 40% of the accumulated corpus. The employee can withdraw the remaining amount as a lump sum.
NPS State Government Scheme Returns
The annualised average returns of the NPS Scheme (State Government) have been over 9.34% across different fund managers in 10 years.
SBI Pension Fund
SBIPF has given a return of 9.5% in 10 years and 9.34% since its inception on 25 June 2009. In the last five years, SBIPF has given a return of 7.82%, according to data on the NPS Trust website. The NAV of SBIPF as on 30 August 2022 was 32.47.
LIC Pension Fund
LICPF has given a return of 9.55% in 10 years and 9.42% since its inception on 25 June 2009. In the last five years, LICPF has given a return of 7.76%, according to data on the NPS Trust website. The NAV of LICPF as on 30 August 2022 was 32.77.
UTI Retirement Solutions (UTIRSL)
UTIRSL has given a return of 9.51% in 10 years and 9.37% since its inception on 25 June 2009. In the last five years, UTIRSL has given a return of 7.76%, according to data on the NPS Trust website. The NAV of UTIRSL as on 30 August 2022 was 32.60.
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NPS Central Government Scheme Returns
The average annualised returns of the NPS Scheme (Central Government) have been over 9.4% across different fund managers in 10 years.
SBI Pension Fund
SBIPF has given a return of 9.48% in 10 years and 9.67% since its inception on 1-08-2008. In the last five years, SBIPF has given a return of 7.89%, according to data on the NPS Trust website. The NAV of SBIPF as on 30 August 2022 was 37.84.
LIC Pension Fund
LICPF has given a return of 9.52% in 10 years and 9.46% since its inception on 1-08-2008. In the last five years, LICPF has given a return of 7.86%, according to data on NPS Trust website. The NAV of LICPF as on 30 August 2022 was 36.83.
UTI Retirement Solutions (UTIRSL)
UTIRSL has given a return of 9.51% in 10 years and 9.42% since its inception on 1-08-2008. In the last five years, UTIRSL has given a return of 7.83%, according to data on the NPS Trust website. The NAV of UTIRSL as on 30 August 2022 was 36.63.
