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Indian government introduces Unified Pension Scheme (UPS) for employees, starting April 2025, with assured post-retirement payouts. Compare OPS, NPS, and UPS differences.
UPS to become operational from April 1.
UPS vs NPS vs OPS: The Indian government has introduced an option for central government employees to choose the Unified Pension Scheme (UPS) under the National Pension System (NPS). UPS will become operational from April 01, 2025. UPS allows them to receive an assured payout after their retirement.
Presently, Indian government employees have two options Old Pension Scheme (OPS) and NPS (New Pension Scheme) to secure their post-retirement life. Soon they will have another option known as UPS (Unified Pension Scheme).
Let’s understand the basic difference between OPS vs NPS vs UPS
Old Pension Scheme
OPS was available for government employees who joined the government jobs before 2004. After the introduction of NPS in 2004, OPS was discontinued for new joiners. However, those who joined the workforce before December 22, 2004 still cover under the OPS.
New Pension Scheme
NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. Under the NPS, the individual contributes to his retirement account and also his
employer can also co-contribute for the social security/welfare of the individual.
NPS is designed on Defined contribution basis wherein the subscriber contributes to his account, there is no defined benefit that would be available at the time of exit from the system and the accumulated wealth depends on the contributions made and the income generated from investment of such wealth.
All government employees after 2004 are covered under NPS. Later, it was extended to cover private-sector employees, self-employed individuals, and NRIs in 2009.
Unified Pension Scheme
Basically, UPS is a fund-based payout system which relies on the regular and timely accumulation and investment of applicable contributions (from both the employee and the employer (the Central Government) for grant of monthly payout to the retiree.
While NPS is market-linked with returns depending on equity and debt performance, UPS offers assured pension payout based on last drawn salary.
NPS is subject to market fluctuations, while UPS has low-risk, as pension is guaranteed.
NPS’s amount will depend on corpus accumulated through investments. UPS, on the other hand, minimum assured pension of Rs 10,000 per month after 10 years of service.
Once Employees under NPS opt for UPS, they can’t go back to NPS.
UPS Calculator: How To Calculate Pension Under UPS
The rate of full assured payout will be @50% of 12 monthly average basic pay, immediately prior to superannuation. Full assured payout is payable after a
minimum 25 years of qualifying service. In case of lesser qualifying service period, proportionate payout would be admissible.
A minimum guaranteed payout of Rs. 10,000 per month shall be assured in case superannuation is after 10 years or more of qualifying service subject to timely and regular credit of contributions and no withdrawals. In cases of voluntary retirement after a minimum 25 years of qualifying service, assured payout will commence from the date on which the employee would have superannuated if he had continued in service.