OPS vs NPS vs TAPS: What Tamil Nadu’s New Pension Scheme Really Means for Employees

 

OPS vs NPS vs TAPS: What Tamil Nadu’s New Pension Scheme Really Means for Employees

On January 3, 2026, the Tamil Nadu government unveiled the Tamil Nadu Assured Pension Scheme (TAPS)—a long-awaited move that attempts to bridge the emotional and financial gap between the Old Pension Scheme (OPS) and the National Pension System (NPS).

For thousands of government employees who have spent years voicing concerns over the uncertainty of market-linked pensions, TAPS arrives as a reassurance rather than a complete rollback. It blends the security of OPS with the contributory structure of NPS, offering a middle ground that many employees had been hoping for.

How OPS, NPS and TAPS Compare

Feature	OPS	NPS	TAPS
Nature of Scheme	Guaranteed pension	Market-linked	Assured pension with contributions
Employee Contribution	None	10% of Basic + DA	10% of Basic + DA
Government Contribution	Fully funded	14% of Basic + DA	Additional funding to ensure assurance
Pension Amount	50% of last drawn pay	Depends on market	50% of last drawn basic pay
Inflation Protection	DA twice a year	Not assured	DA aligned with serving employees
Family Pension	60% to spouse	Corpus-based	60% to spouse
Gratuity	Up to ₹20 lakh	No fixed cap	Up to ₹25 lakh
Minimum Pension	As per Pay Commission	Not guaranteed	Guaranteed minimum
Risk Factor	None	High (market risk)	None for employee

What Makes TAPS Different

Pension Based on Last Drawn Salary
One of the most welcomed features of TAPS is that pension will be calculated on the last month’s basic pay, just like the original OPS. This is a major departure from the Centre’s Unified Pension Scheme (UPS), which uses an average of the last 12 months—often resulting in a lower pension.

Relief for Retired CPS Employees
Employees who joined under the Contributory Pension Scheme (CPS) but retired before TAPS came into force have not been left out. The government has introduced a special compassionate pension, acknowledging their service and long-standing concerns.

Higher Gratuity, Better Security
The enhancement of retirement and death gratuity to ₹25 lakh provides a much-needed financial cushion for families at a critical time.

Clear Financial Commitment from the State
To back its promise, the Tamil Nadu government has committed an initial ₹13,000 crore and an annual contribution of around ₹11,000 crore. This funding will cover the gap between employee contributions and the assured 50% pension, underlining the State’s intent to keep the scheme sustainable.

The Bigger Picture: Is TAPS the Right Balance?

While TAPS may not be a full return to OPS, it significantly addresses the biggest fear surrounding NPS—uncertainty. Employees continue to contribute 10% of their salary, but in return they receive a guaranteed, inflation-protected pension, free from market ups and downs.

In essence, TAPS offers employees peace of mind without placing the entire burden back on the State. For many, it feels less like a policy compromise and more like a long-overdue assurance.