₹2.25 crore or ₹84,658/month? Govt employees face pension fork as advisor sounds June alarm

₹2.25 crore or ₹84,658 per month for life?

That’s the retirement riddle facing Central Government employees, who must choose between the National Pension System (NPS) and the Unified Pension Scheme (UPS) by June 2025. SEBI-registered investment advisor Abhishek Kumar flagged the dilemma in a recent LinkedIn post, asking: “Which one would you pick?”

The stakes are high, and the decision—once made—is irreversible.

As Kumar explains, here’s what separates the two: Under UPS, the government contributes 10% of salary and adds another 8.5% to the employee's pension pool. NPS, by contrast, offers a higher 14% government contribution, but benefits depend on market-linked annuity plans.

The payout math? It’s a battle between certainty and potential.

According to Kumar, staying with NPS for 25 years could build a corpus of ₹2.25 crore. You could use 60% of that to draw ₹33,750 per month, increasing the payout by 3% annually. The remaining 40% could be used to purchase a joint-life annuity at 7%, yielding ₹52,500 per month.

UPS keeps things fixed: a pension of ₹84,658 per month (50% of final basic pay), adjusted for dearness allowance through retirement. It also offers a lumpsum payout of ₹8.45 lakh at the age of 60.

But Kumar cautions that UPS comes with its own risks—once chosen, there’s no switching back to NPS. And if an employee exits government service early, their UPS pension could be delayed or reduced.

So, what’s better?

“If you want stability and guaranteed income, UPS is your path. But if you’re comfortable with market risks and prefer long-term flexibility, NPS may suit you better,” Kumar wrote.