National Pension System 

• NPS, regulated by the Pension Fund Regulatory and Development Authority (PFRDA), is a contributory pension scheme under which employees contribute 10 per cent of their salary. The government contributes 14 per cent towards the employees’ NPS accounts. 
• Under NPS, individual savings are pooled into a pension fund which are invested by PFRDA regulated professional fund managers as per the approved investment guidelines into the diversified portfolios comprising Government Bonds, Bills, Corporate Debentures and Shares. These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.
• ​At the time of normal exit from NPS, the subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA empaneled Life Insurance Company apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so.

Eligibility

Citizens:

• A citizen of India, whether resident or non-resident, between 18 – 60 years of age.

Central Government Employees:

• The Central Government had introduced the NPS with effect from January 1, 2004 (except for armed forces). Hence, all Central Government employees joining on or after 01-01- 2004 are mandatorily covered under NPS.

State Government Employees:

• To be a subscriber under a State Government, the individual has to be employed under the particular State Government. Various State Governments have adopted NPS architecture and implemented NPS with effect from different dates. 

Old Pension Scheme 

• The OPS, on the other hand, is a defined benefit scheme that provides a pension based on the individual’s last drawn salary and the number of years of service. 
• The scheme is open to government employees who have completed at least 10 years of service. 

Differences

• One of the key differences between the NPS and OPS is the level of guaranteed pension provided. Under the NPS, the government does not provide any guaranteed pension. Instead, the pension received is based on the investment returns generated by the pension funds. Whereas the OPS provides a guaranteed pension based on the individual’s last drawn salary and the number of years of service. 
• Another important difference between the two schemes is the age limit. The NPS is open to citizens between the ages of 18 and 60, while the OPS is open to government employees who have completed at least 10 years of service. 

Concerns

• The Reserve Bank of India has cautioned states against reverting to the old pension scheme (OPS), stating that it will add to the fiscal burden of States in the coming years.
• The RBI warning has come after more states joined the queue to bring back OPS instead of the NPS. 
• OPS is considered fiscally unsustainable, and state governments do not have the money to fund it. OPS had no accumulated funds or stock of savings for pension obligations and hence was a clear fiscal burden.
• OPS involved a direct transfer of resources from the current generation of taxpayers to fund the pensioners. The scheme is always an attractive dispensation for political parties as the current aged people can benefit from it even though they may not have contributed to the pension kitty.
• NPS is a defined contribution pension scheme. NPS enables an individual to undertake retirement planning while in employment. 
• NPS is designed to deliver a sustainable solution of having adequate retirement income in old age or upon superannuation.

Why in News?

• The Pension Fund Regulatory and Development Authority (PFRDA) has now allowed National Pension System (NPS) subscribers to deposit their contributions through the convenience of the Unified Payments Interface (UPI) QR code. 
• This advancement aims to simplify the contribution process, making it more accessible and efficient for NPS participants.

https://pib.gov.in/PressReleasePage.aspx?PRID=1988900