Top 10 Government Pension Schemes In India 2025

Top 10 Government Pension Schemes In India

Government pension schemes are safe and useful for your retirement plan. Each of the schemes has been tailored to meet certain requirements such as tax compensation, pensions, and other low-risk investments. Given this, below are the top 10 government pension schemes with their features and benefits:

1. National Pension Scheme (NPS)

Features:

• A retirement scheme launched by the government to ensure a sustained and secure life after retirement.

• Flexible contributions based on the investor’s affordability. Individuals can choose between Tier 1 (mandatory lock-in till retirement) and Tier 2 accounts (optional savings with no lock-in).

• The proportion of equity exposure is limited to 75% to minimise the adverse effects of changing market proportions.

• Investors can also select a fund manager of their choice or switch between Active or Auto-choice strategies.

Benefits:

• As per section 80C and 80CCD(1B), an investor can claim tax deductions up to a maximum of ₹2,00,000.

• Gives a chance to build a huge retirement corpus but allows for some withdrawals for marriage, education and medical emergencies.

• On maturity, 60% of the corpus is tax-free, while 40% of it, in its entirety, must be converted into an annuity contract.

2. Atal Pension Yojana (APY)

Features:

• Targeted employees of the unorganised sector for retirement security.

• Provides fixed pensions ranging from INR 1,000 to INR 5,000 per month based on contribution and age of entry.

• The monthly, quarterly or half-yearly contributions are automatically debited from the bank account of the subscriber.

• The Central Government shall contribute 50% of the gross contribution or 1000 rupees each year, whichever appears lower, for qualifying subscribers.

Benefits:

• Guarantee of income to even those in the unorganised sector with a low contribution.

• Tax exemptions under Section 80CCD.

• After retirement, they ensure a regular flow of income to subscribers or their spouses.

3. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

Features:

• Unique to the aged 60 plus group, this product has 10 years for 7 suspensions.

• The annual figures are guaranteed at 7.40% per year with a monthly, quarterly or yearly payment frequency.

• Investment is in an immediate annuity, with a limit of INR 15 lacs as the purchase price.

• To avail of a loan facility, one must wait for three years and can borrow up to 75% of his Purchase Price.

Benefits:

• Assured and free of risks earnings for ten years.

• Provides tax efficient returns as it is treated as income and liable to tax but is obligatory to be written off under such sections.

• Reimbursement of the purchase amount is made to the nominee when the policyholder dies during the policy period Only.

4. Employee Pension Scheme (EPS)

Features:

• Overseen by the EPFO, the scheme is aimed at employees of the organised sector.

• Employers are required to pay 8.33 per cent of the salary in respect of the employee whose salary does not exceed ₹15,000 per month.

• The pension is computed based on the total years worked and the last five years’ average pay.

Benefits:

• Grants the employees a pension every month after completing ten years of service in the company.

• Disability insurance and widows pension plans are provided to the dependants so that they remain financially independent.

• Pension fund for the organised workers which is quite secure and stable about EPF accounts.

5. Varishtha Pension Bima Yojana (VPBY)

Features:

• Managed by LIC provides an Immediate annuity scheme for senior residents who are above the age of 60 years.

• The investment varies between ₹1.5 lakh and ₹15 lakh with monthly, quarterly, half-yearly or annual payout options.

• Provides pension not less than INR 12000 per year along with academic gains.

Benefits:

• Guarantees a regular pension even after retirement without any risks on the market.

• The tax-free amount received upon maturity brings additional solace to old age persons.

• Offers a risk-free, government-sponsored program which is very safe.

Read More: Mukhyamantri Rajya Nirashrit Mahila Samman Pension Yojana

6. Indira Gandhi National Old Age Pension Scheme (IGNOAPS)

Features:

• A social welfare pension scheme which is meant for persons aged 60 years and above who are below the poverty line.

• Includes paying out pensions of ₹200 per month to the age cohort of 60-79 years and pensions in the amounts of ₹500 to people, who are in the age cohort of 80 years and above.

• Partly financed by the Central and State governments.

Benefits:

• Offers important economic assistance to older persons from weaker sections of society.

• Easy way of getting enrollment with a minimum of paperwork for those belonging to rural and urban BPL families.

• Aims at Old Age Poverty alleviation and generation of less dependence among the elderly.

7. LIC New Jeevan Shanti Plan

Features:

• A non-linked, non-participating annuity plan with options for an immediate or deferred annuity.

• Requires a single premium payment, with flexible annuity options tailored to different needs.

• A deferred annuity provides guaranteed benefits, even if payouts begin after several years.

Benefits:

• Guaranteed income for a lifetime ensures that there will be financial stability.

• Provides multiple modes of payout which assists in diversification of the fund.

• Debt repayment option to the nominee upon the demise of the insured member.

8. Unified Pension Scheme

Features:

• Integrates the importance of the Provident Fund, Pension Fund and NPS into a single scheme for employees working in the organised sector.

• Enables uninterrupted accumulation of pension plans in case of a change of career.

• There is a single point of administration hence there is no ambiguity, and greater visibility is achieved.

Benefits:

• An integrated approach to retirement planning encompassing retirement benefits, pension plans and investable rights.

• Facilitates the management of retirement funds/plans with minimum administration.

• Promotes saving behaviour and long-term financial independence.

9. Public Provident Fund (PPF)

Features:

• A scheme for retiring which has a 15-year fixed or a 5-year extension available.

• Its contributions are available annually starting from ₹500 and going up to ₹1.5 lakh with tax advantages under section 80C.

• Pension provisions come with an average annual interest rate of 7.1% with payout yields revised every quarter by the government.

Benefits:

• A great choice for investors who are looking for a low-risk, no-loss savings scheme backed by the Government.

• The interest earned and the amount at maturity are completely exempt from tax.

• The power of compounding, helps one set aside a decent amount for retirement.

10. Senior Citizen Savings Scheme (SCSS)

Features:

• Developed for persons above the age of 60 years to provide a safe and high-return saving option.

• The maximum investment limit stands at ‘₹ 15 Lakhs’, while it pays out quarterly at the specified rate of 7.4% per annum.

• The tenor is five years while additional three years can be added.

Benefits:

• Makes for a consistent source of income with assured returns which is especially useful for a retiree.

• Provides an opportunity for tax deductions under section 80C while investing.

• A safer alternative for those who want a consistent income without taking risks on their capital.