Central government employees face a critical retirement choice between NPS and UPS. New analysis reveals that replicating UPS's guaranteed, inflation-indexed pension through the market-linked NPS system proves extremely difficult under realistic scenarios. UPS promises an assured pension equal to 50% of average basic pay, indexed to inflation for life. NPS depends entirely on market returns and investment performance. The comparison hinges on a simple test: can an NPS corpus fund equivalent UPS cashflows? Simulations show the required withdrawal rate would be approximately 6.7% annually, indexed to inflation. Retirement planning research suggests sustainable withdrawal rates above 3.5% are difficult to maintain over long periods. In 82% of modeled cases, the NPS corpus depletes before age 90.
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