Old Pension Scheme (OPS) Vs New Pension Scheme (NPS)

What is the Old Pension Scheme (OPS)?

A total of 50% of the last drawn basic pay was fixed as a Pension to the Center as well as State Government employees.
Like salaries of government employees, the monthly payouts of pensioners also increase with the hikes in dearness allowance (DA).
It provides lifelong income after retirement to Government employees.
Under this scheme, there was the provision of the General Provident Fund (GPF). A certain percentage of salary was contributed to GPF and the total amount that is accumulated throughout the service is paid to employees at the time of retirement.

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Unfunded Liability- The main problem was that the pension liability remained unfunded. There was no corpus specifically for pension, which would grow continuously and could be dipped into for payments.
Intergeneration Equity Issues- The government had no clear plan on how to pay pensioners year after year. The present generation of taxpayers paid for all pensioners as of date. This creates intergeneration equity issues.
Unsustainable- The OPS was also unsustainable. For one, pension liabilities would keep climbing since pensioners’ benefits increased every year.
This led to a massive pension burden on the Union and state Governments.

To deal with the above concerns, Old Age Social and Income Security (OASIS) project becomes the base for New Pension Scheme.
It was originally conceived for unorganized sector workers.
The defined contribution comprised 10 percent of the basic salary and dearness allowance by the employee and the same contribution by the government. The government increased its contribution to 14 percent.
NPS is being implemented and regulated by Pension Fund Regulatory and Development Authority (PFRDA) in the country.
National Pension System Trust (NPST) established by PFRDA is the registered owner of all assets under NPS.
At retirement, employees can withdraw 60 percent of the corpus, which is tax-free, and the remaining 40 percent is invested in annuities, which is taxed.

OPS	NPS
OPS used to give a fixed monthly income to government employees after retirement.	After retirement, employees can withdraw 60% of the corpus. The remaining 40 percent must be invested in annuities for regular income or pension.
No tax benefit is applicable to the employees.	60 percent of the corpus on maturity is tax-free but the remaining 40 percent is taxable.
It provides 50 percent of the last drawn salary as a pension.	The remaining 40 percent of the amount is invested in pensions.
Only government employees are eligible to receive a pension under the OPS after retirement.	NPS is also meant for government employees. However, private sector employees can also join NPS.
This scheme was discontinued in 2004.	This scheme came into effect in 2004, However, some states switched to OPS.