On August 24, the Central Government launched a new scheme named UPS (Unified Pension Scheme). This new scheme will come into effect on April 1, 2025.
The UPS scheme is meant for only government employees, whereas the New Pension Scheme (NPS) is accessible to both government and private employees.
The government has offered many benefits of the earlier Old Pension Scheme (OPS), like assured pension, family pension, and indexation benefits, which are now possible via UPS.
Thus, government employees can avail of pensions and have the choice to select UPS or NPS. But only in a few states is the OPS scheme available for government employees.
The central government will provide pensions to government employees under the Unified Pension Scheme (UPS). After serving for 25 years, if a government employee retires, then 50 percent of his basic salary for the last year will be given as a pension. The UPS scheme has provisions for an assured pension.
Even though a government employee works for 10 years, a sum of Rs 10,000 in pension will be paid by the government with indexation benefits.
In addition, UPS has a family pension plan. The employee’s family will get 60 percent of his pension if he passes away after retirement.
Apart from gratuity, a single payment will be made upon retirement. For every six months of service, it will be calculated as one-tenth of the basic pay and dearness allowance (DA).
This scheme will help nearly 23 lakh employees of the Central Government.
We have compared UPS, NPS, and OPS based on a recent social media post by Union Minister Ashwini Vaishnaw about the positive aspects of UPS.
Differences between UPS, NPS, and OPS
- UPS is exclusively for government-sector employees. Employees in the government and private sectors are eligible for NPS. OPS was also intended for workers in the public sector.
- A pension equal to 50 percent of the average basic salary for the previous 12 months will be awarded upon retirement at UPS. While OPS provided a pension equal to 50 percent of the last basic salary, NPS did not offer a guaranteed retirement pension.
- UPS and OPS can be considered as secure schemes. Whereas, NPS is linked to the stock market.
- Similar to NPS, 10 percent of UPS employees salaries (basic + DA) will be deducted. But instead of contributing 14 percent to this, the government will now contribute 18.5 percent. No deduction was found in the OPS.
- When an employee retires from UPS, they will get a lump sum payment equal to one-tenth of their basic salary plus a dearness allowance for every six months of service. Under NPS, 40 percent of the total money contributed during service might be retained for an annuity, and 60 percent could be withdrawn as a lump payment upon retirement.
- NPS requires 40% of the fund to be invested in order to receive a pension, but UPS and OPS do not require any investment.
- Pension indexation benefits are available to UPS and OPS employees. However, NPS does not offer this benefit.
- ensured a minimum superannuation pension of Rs 10,000 per month following a minimum of ten years of UPS service. While OPS has a provision for a 40-pc pension commute, NPS does not have such a provision.
In conclusion, we see how government employees will benefit from the UPS scheme rather than old schemes like NPS and OPS.
UPS has numerous benefits, like an assured pension for government employees, a family pension, a minimum pension, an adjustment for inflation, and a lump-sum payment in retirement.
