Unified Pension Scheme: The Modi government has introduced a new pension scheme called the Unified Pension Scheme / UPS Pension Scheme (UPS) for Central Government employees who joined the service after January 1, 2004. This scheme, which will be implemented from 1st April 2025, guarantees a pension equal to 50% of the basic salary.
That decision to introduce (Unified Pension Scheme / UPS Pension Scheme (UPS) UPS comes to response to several non-BJP states reverting to the DA-Linked Old Pension Scheme (OPS) and employee organisations in other states demanding the same
Employees have the option to choose between the Unified Pension Scheme / UPS Pension Scheme (UPS) (UPS) and the National Pension Scheme (NPS).
Unified Pension Scheme – UPS vs NPS vs OPS
How is the Unified Pension Scheme (Unified Pension Scheme / UPS Pension Scheme (UPS)) different from the National Pension Scheme (NPS) and the Old Pension Scheme (UPS vs NPS vs OPS)? The difference is given below:-
UPS vs NPS vs OPS – Unified Pension Scheme / UPS Pension Scheme (UPS): What are the Top features?
- Under the Unified Pension Scheme (UPS), Employees with the minimum qualifying service of 25 years will receive an assured pension of 50% of the average basic pay drawn over the last 12 months prior to superannuation.
- For service periods between 10 and 25 years, the pension will be proportional.
- The Unified Pension Scheme / UPS Pension Scheme (UPS) will apply Inflation Indexation to the assured pension, assured family pension and assured minimum pension.
- The scheme also includes an assured Minimum Pension of Rupees 10,000/- Per Month upon superannuation with a minimum of 10 years of service.
- In the event of an employee’s demise, their family will receive an assured pension of 60% of the employee’s pension immediately before their demise.
- Employees choosing UPS will not incur any extra financial burden their contribution will stay at 10% while the government’s contribution will rise from 14% to 18.5%.
- Dearness relief will be based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to service employees.
- Additionally, employees will receive a lump sum payment at superannuation, calculated as 1/10th of monthly emoluments (Pay+DA) for every completed 6 months of service. This lumps some payment is separate from gratuity and does not impact the assured pens and amount.
UPS vs NPS vs OPS – National Pension Scheme (NPS): What are the Top features?
NPS and the newly proposed Unified Pension Scheme / UPS Pension Scheme (UPS) differs in terms of government contributions, pension amounts and family pension provisions. Top features are given below:-
- Family pension under NPS depends on the accumulated Corpus in the Pension Fund and the chosen annuity plan at retirement.
- Under NPS, Central Government employees contribute 10% of their basic salary, while the government contributes 14%, according to an ET report.
- NPS has been implemented for all Government employees, except those in the armed forces, who join the central government on or after 1st January 2004. It is also available for private sector employees. Most state/union territory Governments have also notified NPS for their new employees.
- The pension amount in NPS is not fixed as it is linked to market movements, whereas Unified Pension Scheme/UPS Pension Scheme (UPS) provide an assured pension of 50% of the salary for those who joined the service after 1st January 2004.
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What is the Unified Pension Scheme and its Benefits?
UPS vs NPS vs OPS – Old Pension Scheme (OPS): What are the Top features?
- The Old Pension Scheme (OPS) provided retired Government Employees with a monthly pension equal to 50% of their last drawn salary. This amount was subjected to an increase in line with the hike in the Dearness Allowance (DA) rates. Upon retirement, employees were also entitled to receive gratuity payments with a minimum limit of 20 lakh.
- Under the OPS, If a retired employee passed away, their family would continue to receive pension benefits. Another notable aspect was that no deductions were made from an employee’s salary towards pension contributions which is in contrast to the NPS.
Unified Pension Scheme – Recently several states in India, including Himachal Pradesh, Rajasthan, Chhattisgarh and Punjab, have made the decision to revert to the Old Pension Scheme moving away from the NPS.