Which is better between NPS and UPS: The central government has approved the Unified Pension Scheme (UPS). Since the approval of UPS, questions are arising in the minds of people whether it would be better to shift from NPS or stay in it. Today we will tell you whether there will be any benefit or disadvantage in shifting from NPS to UPS. Along with this, we will also tell you what important things to keep in mind before choosing UPS.
Only those people can opt for UPS who are currently in the New Pension Scheme (NPS). These include retired employees as well. UPS employees are guaranteed 50% of their average basic salary in the last 12 months as pension upon retirement after a minimum of 25 years of service. Whereas the amount received in NPS depends on the returns from the market.
Fixed pension amount
Pension in UPS will be decided on proportional basis for a minimum service period of 10 years. Also, a pension of Rs 10,000 per month has been ensured on retirement after a minimum of 10 years of service.
Earlier, under the Old Pension Scheme (OPS), employees used to get 50 percent of their last basic salary as pension. However, unlike the old pension scheme, UPS is a scheme of contributory nature in which employees will have to contribute 10 percent of their basic salary and dearness allowance. At the same time, the contribution of the central government will be 18.5 percent. Whereas under NPS, the employer’s contribution has been kept at 14 percent while the employee’s contribution is fixed at 10 percent.
Keep these things in mind
If any employee switches from NPS to UPS, then he will not be able to go back to NPS. Apart from this, the employees retiring before 31 March 2025 are to be paid Rs 800 crore as dues under NPS. If such employees opt for UPS, they will get the due amount.
UPS is expected to put an additional burden of Rs 6250 crore on the government treasury every year. However, due to changes in the number of employees, the expenditure on this will vary every year.
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