UNIFIED PENSION SCHEME ( UPS )
UNIFIED PENSION SCHEME
SENIOR CITIZENS – Guidance for Golden Age :
We have , over the years , published various articles relating to the needs of Senior citizens relating to investment , health , insurance and Financial planning . Some of the articles with links are
1. On Financial Planning : Long term retirement Planning for the young
2. On Health Insurance : SENIORS HEALTH INSURANCE
3. On Investment :
2. INVESTMENT OPTIONS FOR SENIOR CITIZENS
4. On Health : Planning beyond Finance
5. For bank retirees BANK PENSIONERS NEWS
6. On on-line submissions of Life Certificates for pensioners : LIFE CERTIFICATE
Apart from the above articles , we have received contributions from various readers , especially from USA , requesting us to publish articles / links to articles which are useful to senior citizens . Synopsis to such articles / links can be found below. However we have not verified the accuracy or veracity of the facts in the articles . We hope the articles will be generally useful to senior citizens , especially from the USA
CABINET APPROVES UNIFIED PENSION SCHEME FOR THE GOVERNMENT EMPLOYEES :
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the Unified Pension Scheme (UPS).
The salient features of the UPS are:
1 . Assured pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. This pay is to be proportionate for lesser service period upto a minimum of 10 years of service.
Assured family pension: @60% of pension of the employee immediately before her/his demise.
Assured minimum pension: @10,000 per month on superannuation after minimum 10 years of service.
4 Inflation indexation: on assured pension, on assured family pension and assured minimum pension
5 . Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of service employees
Lump sum payment at superannuation in addition to gratuity
. 1/10th of monthly emoluments (pay + DA) as on the date of superannuation for every completed six months of service this payment will not reduce the quantum of assured pension
REF : PIB Press release dated 24.08.2024
News media report : Who Can Join UPS?
Under the UPS, there will be a provision of a fixed assured pension, unlike the New Pension Scheme (NPS) which does not promise a fixed pension amount. Central government employees will have a right to decide to stay in the New Pension Scheme (NPS) or join the Unified Pension Scheme (UPS),
During a media briefing , Cabinet Secretary Designate T V Somanathan also said, “This will also apply to all those who have already retired under the NPS from 2004 onwards. Though the new scheme will take effect from April 1, 2025, everybody who has retired under NPS from the time of its inception and also including those retiring till March 31, 2025, will also be eligible for all these five benefits of the UPS. They will get arrears of the past after adjusting whatever they have withdrawn.”
To know about present NPS scheme , CLICK HERE and for difference between the two schemes , go through the below table :
FEATURE
PENSION TYPE
INVESTMENT RISK
PENSION GUARANTEE
ELIGIBILITY
NPS
Defined Contribution
Market-Linked
NO
Government employees, corporate employees, individual subscribers
UPS
Defined Benefit
Government-Funded
YES
Government employees who who are retired or retiring up till March 31, 2025
In summary, NPS offers a market-linked approach with potential for higher returns but also involves investment risks, while UPS provides a guaranteed pension amount but is limited to government employees who joined service after a specific date. The choice between NPS and UPS depends on individual preferences and risk tolerance.
While Government employees / pensioners were demanding that the pension scheme may be returned to the Old Pension Scheme ( OPS ) , the present government has brought the new UPS plan . Then , what is the difference between OPS and UPS ?
DIFFERENCE BETWEEN OPS AND UPS :
Pension Calculation
OPS: The pension is calculated based on the last drawn basic salary and dearness allowance.
UPS: The pension is calculated based on the average basic salary and dearness allowance over the last 12 months of service.
Employee Contribution
OPS: Employees do not contribute to the pension fund.
UPS: Employees contribute a portion of their salary to the pension fund.
Minimum Pension
OPS: The minimum pension is higher under OPS.
UPS: The minimum pension is lower under UPS.
Lumpsum Payment
OPS: There is no provision for a lumpsum payment.
UPS: There is a provision for a lumpsum payment.
Tax Benefits
OPS: The pension is generally tax-exempt.
UPS: The pension may be subject to tax.
In essence, OPS offers a more assured pension, while UPS provides flexibility and potential for higher returns. The choice between the two depends on individual preferences and financial goals.
Note: The specific details and rules of these schemes may vary over time. It’s always advisable to consult with a financial advisor or government pension authority for the most accurate and up-to-date information.
