The table below highlights the primary distinctions between NPS and UPS to help you assess which scheme aligns better with your retirement goals:
Feature | NPS | UPS |
---|
Type | Market-linked contribution | Hybrid (defined benefit + contribution) |
Pension Guarantee | No | Yes |
Inflation Protection | No | Yes (DA-linked) |
Employee Contribution | 10% of basic salary + DA | 10% of basic salary + DA |
Government Contribution | 14% of basic salary + DA | 18.5% of basic salary + DA |
Tax Benefits | Deductions under Sections 80C, 80CCD(1B), and 80CCD(2) | Limited; details unclear |
Withdrawal Flexibility | High | Low |
Risk | Market-dependent | Risk-free |
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NPS vs UPS: Which one should you choose?
NPS is ideal for private-sector employees, NRIs, and self-employed individuals who are comfortable with market risks and seek higher returns. It offers significant flexibility in fund management, making it a preferred choice for those who want to actively manage their retirement savings.
Additionally, NPS provides attractive tax benefits under Sections 80C, 80CCD(1B), and 80CCD(2), which can help you save more while building your retirement corpus. However, it is important to note that NPS does not guarantee a fixed pension, as returns are market-dependent.
To mitigate the risks associated with market fluctuations, you can diversify your retirement portfolio by investing in the Bajaj Finance Fixed Deposit, which offers assured returns of up to 7.30% p.a. This low-risk option ensures financial stability during retirement, complementing the growth potential of NPS. Open FD.