Pension system change: Big News! Now you will be able to choose either UPS or NPS, know which one is better

 

Unified Pension Scheme: With the beginning of April, there is a big change in the pension system. Now the central employees coming under NPS have been given the option to switch to UPS i.e. Unified Pension Scheme.

Unified Pension Scheme: The month of April has started and with this there is going to be a big change in the pension system. Yes, the Pension Fund Regulatory and Development Authority had notified UPS in the month of March and issued a notification regarding its implementation from April 1, 2025. This scheme is especially beneficial for those employees who want a fixed income after retirement. UPS will be applicable for those central employees who are already registered under NPS. They will now have the option to choose either NPS or UPS. Let us know how to get its benefits and which option is better?

UPS was announced in January

On January 24, the government officially announced the Unified Pension Scheme (UPS) as an option to the National Pension System (NPS) and now announced the implementation of this scheme from April 1, 2025. Central employees covered under NPS will get the benefit of this new scheme. That is, central employees who come under the National Pension Scheme and choose the option of UPS under it, will be able to take advantage of it. People choosing UPS will not be entitled to any other policy concession, policy change, financial benefit.

Understand UPS easily

Now let us tell you what is UPS? So under the Unified Pension Scheme, now central employees will be given a fixed pension, which will be 50% of the average basic salary of the last 12 months before the retirement of the employee. To get this pension, the employee will have to serve for at least 25 years. If the employee dies, the family will continue to receive a fixed pension, which will be 60 percent of the pension he receives. Apart from this, minimum assured pension will also be given, which means that those who work for 10 years will get a pension of at least Rs 10,000.

How much will be the government contribution?

In the New Pension Scheme (NPS), the employee has to contribute 10 percent of his basic salary and the government contribution in it is 14 percent. At the same time, in the UPS, which is going to be implemented from April 1, 2025, this contribution of the government will be 18.5 percent of the basic salary of the employee. With the implementation of this unified pension scheme, about 23 lakh employees are going to benefit and the additional burden on the government treasury will be Rs 6250 crore in the first year.

Pension will increase on the basis of inflation

Indexation has also been added under the Unified Pension Scheme. This means that the pension of retired employees will keep increasing according to inflation. This increase will be added to the pension as Dearness Allowance. It will be calculated on the basis of All India Consumer Price Index for Industrial Workers (AICPI-W). At the same time, a lump sum amount will also be given on retirement.

What is the National Pension Scheme (NPS)?

Let us tell you that after closing the Old Pension Scheme (OPS), the government started the National Pension Scheme (NPS) for all government employees in 2004. The account in NPS is portable, that is, it can be run from anywhere in the country. The government also opened it for private sector employees in 2009. Now the central employees coming under this scheme have also been given the facility to switch to UPS.

  • This is the big difference between UPS and NPS

    Under UPS, central employees will get a fixed pension, which will be half of their average basic salary of 12 months before retirement. Whereas, in NPS the pension amount was dependent on market returns, due to which it keeps fluctuating.

  • In both UPS and NPS, government employees will have to contribute 10 percent of their salary. But if we talk about government contribution, then in NPS the contribution was 14 percent, while in UPS it will be 18.5 percent.
  • Under UPS, after 25 years of service, employees will get fixed pension and lump sum amount. The pension will also increase according to the inflation rate. Whereas there is no fixed pension in NPS.

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