Pension Calculation: How much pension will a UPS employee get after 25 years of service? Calculation will be done using this formula

UPS has been launched recently by the government. If the employees choose this scheme designed to give pension to government employees, then know here how much pension they will get on how much salary after completing the tenure of 25 years.

pension calculation: The central government has recently launched the Unified Pension Scheme (UPS) to provide pension to government employees. This scheme will come into effect on 1 April 2025. Under this scheme, a minimum pension of Rs 10,000 has been fixed for 10 years of service, while the pension calculation for 25 years of service will be done by another formula. In such a situation, the pension given after retirement will be based on their years of service and average income. Also, in this new scheme, provision has been made for family pension after the death of the employee. Let us tell you that if the employees choose the option of UPS, then how much pension they will get according to the salary. 

Know what will be the formula for pension calculation

Contribution in UPS will be same as in NPS. This means that employees will have to contribute 10% and the government will contribute 18.5%. The government contributes 14% in NPS, so the government’s contribution in UPS will be higher. If you invest for 25 years, then as pension amount, you will be given 50% of the average basic salary of 12 months and DR added to it. After the death of the employee, 60% of the employee’s pension will be given as family pension.

How much pension on 50, 60 and 70 thousand basic salary

After working for 25 years, if you do a lump sum calculation as per the formula, then if your average basic pay of the last 12 months adds up to 50 thousand, then you will get a pension of 50 percent of it i.e. 25 thousand rupees. However, after this, dearness relief (DR) will be added separately. On the other hand, when the basic salary becomes 60,000, the pension will be 30,000 + DR and when the basic salary is 70,000, you will be given a pension by adding 35,000 + DR.

How much will be the family pension

In such a case, if family pension is calculated, it will be 60% of your pension. In such a case, the family of a person receiving a pension of Rs 25,000 will get pension by adding 60% of 25,000 = Rs 15,000 + DR. The family of a person receiving a pension of Rs 30,000 will get pension by adding 60% of the pension = Rs 18,000 + DR. And the family of a person receiving a pension of Rs 35,000 will get 60% of 35,000 = Rs 21,000 + DR as family pension.

UPS Vs NPS

UPS is a secure scheme. Whereas, NPS is linked to the stock market.

UPS has a provision for lump sum amount on retirement, which will be calculated as 10th part of basic salary and dearness allowance for every 6 months of service of the employee. Whereas, 60 percent of the total deposit amount in NPS can be withdrawn as lump sum on retirement and 40 percent is kept for annuity.

No investment is required to get pension in UPS, whereas 40 percent of the fund has to be invested in NPS.

There is a provision of pension of Rs 10,000 per month after working for 10 years in UPS. Whereas there is no such provision in NPS, your pension in NPS depends on 40 percent annuity.

UPS is only for government employees. Whereas, NPS is for employees of both government and private sectors.