Unified Pension Scheme: The central government is going to implement the Unified Pension Scheme (UPS) from April 1. The objective of this scheme is to provide a fixed amount as pension to the central government employees. This scheme is being brought under the National Pension System (NPS). At present, this scheme is only for central government employees, but in future state government employees can also be brought under its purview
Unified Pension Scheme: The central government is going to implement the Unified Pension Scheme (UPS) from April 1. The objective of this scheme is to provide a fixed amount as pension to the central government employees. This scheme is being brought under the National Pension System (NPS). At present, this scheme is only for central government employees, but in future state government employees can also be brought under its purview.
The objective of the Unified Pension Scheme (UPS) is to provide 50% guaranteed pension to the employees. If you are a government employee and already come under NPS, then you will get the option to choose UPS. If an employee has completed at least 25 years of service, he will get 50% of the average basic salary of the last 12 months before retirement as pension. If the service is more than 10 years, a minimum pension of Rs 10,000 per month will be given. If the pensioner dies, the family will get 60% of the last pension as family pension.
What is the National Pension System (NPS)?
The central government abolished the Old Pension Scheme (OPS) from the year 2004 and the National Pension System (NPS) was implemented in its place. Initially it was only for government employees, but in 2009 it was also opened to all citizens, non-resident Indians (NRIs), self-employed persons and unorganized sector employees.
How does NPS work?
A fixed amount is deducted from the salary of the employees and it is invested in market-based investment schemes. At the time of retirement, up to 60% of the amount can be withdrawn in lump sum, while the remaining 40% has to be mandatorily invested in annuity, which provides monthly pension. Unlike OPS, there is no guarantee of pension in NPS. The pension amount depends entirely on the performance of the stock market and investment schemes.
What was the Old Pension Scheme (OPS)?
Before NPS, government employees were given pension under the Old Pension Scheme (OPS). In this, the employee got pension based on his last job salary. The pension expenses were completely borne by the government and the employee did not have to pay any contribution amount for this. DA (dearness allowance) was increased twice every year. After the death of the pensioner, the family also got pension.
However, the government felt that this scheme would not be financially sustainable in the long run, so it was discontinued in December 2003 and NPS was implemented from 2004. However, many states have recently re-implemented OPS in view of the demand of the employees, but the central government has so far refused to bring it back.
Which is better among UPS, NPS and OPS?
- Unified Pension Scheme (UPS): It is a mix of OPS and NPS – it provides fixed pension, minimum pension guarantee and family pension. Both the government and the employee have to contribute, which will keep the fund strong. It is good for those who want a guaranteed and stable pension.
- National Pension System (NPS): The government does not give any guarantee in this, but if the stock market performs well, then high returns can be obtained. Those who understand investment can earn more profit in the long run. However, the risk is high because the pension amount depends on the performance of the market.
- Old Pension Scheme (OPS): It was the most beneficial, as the government used to give full pension and DA also increased from time to time. But the government is not in the mood to bring it back, as it may increase the financial burden.
