Navigating Retirement: Comparative Analysis of OPS and NPS

Author: Neha Chauhan


The global landscape is witnessing a dual shift—population growth coupled with an increasingly ageing populace—a transformative trend unfolding across the globe, India included. As of 2022, India was home to 149 million individuals aged 60 and above, making up around 10.5 per cent of its population (International Institute for Population Sciences and United Nations Population Fund, 2023). Projections indicate a substantial rise, with the elderly demographic expected to reach 347 million by 2050, accounting for a significant 20.8 percent of the country’s populace (ibid.). This demographic shift poses multifaceted challenges, urging the formulation of proactive policies and comprehensive programs to cater to the evolving needs of India’s ageing population.

The ageing populace’s implications extend beyond societal dynamics, intertwining with economic dependency. As individuals retire, their income diminishes, while healthcare costs surge, intensifying financial strains. Amidst this landscape, social safety nets assume paramount importance. At the heart of this safety net rests the pension fund.

In the wake of the transition from the Old Pension Scheme (OPS) to the National Pension System (NPS) in 2004, debates comparing the two have persisted. However, in recent times, these discussions have gained considerable traction and prominence. As the population grapples with the implications of these systems, the discourse surrounding the merits and drawbacks of NPS versus OPS has amplified notably. Issues such as retirement income adequacy, investment flexibility, and the overall effectiveness of these pension schemes have been at the forefront of public and expert discussions. Moreover, as demographic shifts continue to emphasise the importance of sustainable retirement solutions, the discourse surrounding NPS and OPS has become even more pronounced and relevant.