THE Central Government has introduced a new pension scheme, the Unified Pension Scheme (UPS) which will come into effectfromApril 1, 2025.InUPS,theGovernment has offered several advantages of the previous Old Pension Scheme (OPS) like assuredpension,family pensionandindexationbenefits. This pension scheme is only for Government employees unlike New Pension Scheme (NPS)whichisofferedtoboth Government and private employees. NowGovernment employees will have the option to choosebetweentheUPS and the New Pension Scheme (NPS) to get a pension.

 

The Old Pension Scheme is also applicable to Government employees in some States. Let’s understand UPS first. UnderUPS,pensionwould be given to Government employees by the Central Government.IfaGovernment employeeretiresafterserving for 25 years, 50 per cent ofhis basic salary for the last 12 monthswillbegivenasapension.The specialthing about this scheme is thatithasprovisionsforanassuredpension. Difference between UPS, NPS and OPS

 

■ UPS is only for Governmentemployees.NPS is for both Government and privatesectoremployees.OPS wasalsoforGovernment sector employees.

■ InUPS,50per centofthe averagebasicsalaryofthelast 12 months will be given as a pension after retirement. There was no provision for a guaranteed retirement pensioninNPS,whereas, in OPS, 50 per cent of the last basic salary wasgivenasapension.

■ UPS and OPS is a secure scheme. However, NPS is linked to the stock market.

■ Like NPS, in UPS, 10 per centofthesalary (Basic+ DA) will be deducted. However, the government's contribution to this will be 18.5 per cent, earlier it was 14 percent.Therewasnodeduction in OPS.

■ UPS has a provision for alumpsumamountonretirement, which will be calculated as one-tenth of the employee's basic salary and dearness allowance for every sixmonthsof service. In NPS, out of the total amount deposited during service, 60 per cent could be withdrawn in a lump sum on retirement and40per cent couldbe kept for annuity.

■ In UPS and OPS, no investment has to bemade to getapension,whereas,inNPS, 40 per cent of the fund has to be invested forapension.

■Thebenefitofindexation inpensionisavailableinUPS and OPS. However, this benefit is not available in NPS.

■ Assured minimum pension of Rs 10,000 per month on superannuation after a minimumof 10 yearsof service in UPS. There is no suchprovisioninNPS,whereas in OPS there is a provision for 40 per cent pension commutation.