Last year, Prime Minister Narendra Modi’s government made a major announcement in the interest of millions of central employees of the country. The announcement was of “Unified Pension Scheme (UPS)”, which is designed to provide pension security to government employees. Now PFRDA (Pension Fund Regulatory and Development Authority) has also issued an official notification regarding this scheme, and it will be implemented in the entire country from 1 April 2025.
This new pension scheme is an advanced version of the National Pension Scheme (NPS), which has been especially prepared keeping in mind the central employees. The purpose of UPS is to ensure economic stability and fixed monthly pension after the government job.
Benefits of Unified Pension Scheme
1. Pension guarantee
Under the UPS, if an employee completes 25 years of service, he will get up to 50% of his last 12 months average salary every month as a pension.
For example, if the final average salary of an employee is ₹ 60,000, he will be given a monthly pension of up to ₹ 30,000.
2. minimum pension of at least ₹ 10,000
If an employee has served 10 years or more but it has not been 25 years, then he will also be given a pension guarantee at least ₹ 10,000 per month.
3. Family benefits
If an employee dies, his family will get 60% of the final pension every month as pension. This step has been taken with the aim of giving financial support for the family.
What is UPS and why was it started?
In 2004, the government started the National Pension Scheme (NPS) by closing the Old Pension Scheme (OPS). Initially it was only for government employees, but since 2009 it was also opened to ordinary citizens. However, there was no guarantee of fixed pension in NPS, as it depended on the market-based investment.
To overcome this deficiency, UPS (Unified Pension Scheme) has been introduced, so that the employees can get confidence that they will get a sure monthly pension after retirement.
How does UPS work?
Cut from salary:
Employees’ salary reduces a fixed amount every month, which is invested in the UPS funds.
Market based investment:
This amount is invested in stock market, government bonds and other financial schemes. It gives good returns in a long time.
Benefits on Retirement:
At the time of retirement, 60% of the deposit amount is given to the lump sum.
The remaining 40% share is compulsorily in investment, and it gives pension to the employee every month.
UPS vs NPS and OPS
Planning Guaranteed Pension Investment Based Family Benefits OPS Yes No Yes NPS No No Limited UPS Yes (50%) Yes (60%)
