Pension plays a crucial role in the life of the people of India and is the prime reason why people want to secure a Government job. Pension helps in providing financial aid to employees throughout their careers till the other family members of the family can maintain the living standards of the family. The pension is considered to be the only source of income in most families after the employee gets retired. Thus, a pension is considered to be a source of financial security and helps in fulfilling the needs that you are unable to do anyway. In this article, we will be sharing all the necessary details related to the Unified Pension Scheme, its eligibility criteria, benefits, returns, etc.
What is the Unified Pension Scheme?
The Unified Pension Scheme is an initiative taken by the Government of India and designed in such a manner that provides the mutual benefits of OPS and NPS together. The Unified Pension Scheme was introduced recently in 2024 which offers the guaranteed family pension, and minimum amount of pension to the employees working for the Government of India. The benefits of the UPS pension scheme retirement can be availed by all the Government employees and to those who come under the range of NPS and UPS which is the reason behind the success of this scheme.
The pension scheme ensures the 50% of the average basic pay for the 12 months till the maturity of the pension and provided to the employees who have served the government for about 25 years. Under this scheme, the beneficiary will be provided with the minimum pension of ₹ 10000 per month for those who have given services for up to 10 years. However, If the beneficiary dies then 60% of the amount will be received to the pensioner before his/her death.
| Scheme | Unified Pension Scheme |
| Announced on | 24 August 2024 |
| Implementation period | 1 April 2025 |
| Employee contribution | 10% of basic pay along with dearness allowance |
| Employer contribution | 18.5% of basic pay along with dearness allowance |
| Beneficiary | Central Government employees |
| Benefits | Regular pension of 10,000 if employee has completed 10 years of service |
Key Benefits of The Unified Pension Scheme
The Unified Pension Scheme provides numerous advantages to its consumers. However, some of the key benefits of the Unified Pension Scheme are:
- Proportional pension: The employees who have completed the 10 years of their services but have not yet reached 25 years will be provided a pension based on the proportion.
- Guaranteed Pension: The permanent employees of Central Government of India get 50% of the basic pay from 12 months before retirement. In order to be eligible for this pension scheme, one needs to complete 25 years of service.
- Family pension: In case if the beneficiary dies before the maturity of the scheme then 60% of the pension is provided to the family as family pension.
- Minimum pension: In ups pension scheme retirement, the government provides the minimum pension of ₹ 10,000 to the employees after getting retired after 10 years of service.
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Eligibility for Unified Pension Scheme
Here is the eligibility criteria for the Unified Pension Scheme:
- This scheme is only open to the Central government of India and comes under the range of the National Pension Scheme (NPS).
- This pension scheme will be provided to the employees who have chosen UPS under the NPS Framework.
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Difference Between OPS, UPS, and NPS
The major difference between the UPS, NPS, and OPS is mentioned below:
| Particulars | OPS | UPS | NPS |
|---|---|---|---|
| Amount of pension | It defines the average earnings till the 10 months of the retirement | 50% of the average basic pay till the 12 months from the retirement | It depends on the type of instrument opted for by the pensioners |
| Eligibility | Open for all Government employees | Pensioners should be Government EmployeesShould have completed the 25 years of services Minimum pensioned need to complete at least 10 years | Individuals should fall between the age group of 18 – 60 or if you are a self–employed or unorganized people. |
| Gratuity | Offred gratuity of up to ₹ 20 lakh | It will pay off along with the maturity benefits | There are no gratuity benefits offered under NPS |
| Minimum pension | ₹ 9,000 per month for the employees who have completed their 10 years of services | ₹ 10,000 provided to the Government employees who have served for 10 years | Minimum investment depends on the amount invested by the pensioner |
| Family pension | The family pension depends on the pension annuity or fund that you have opted for | 60% of the pension is provided to the pensioner before the death of the pensioner | The family Is offered a full pension in case of the demise of the pensioner |
| Risks involved | Market risk | There are no risks involved | There are no risks involved |
| Contribution | The employer contribution: 14% of basic payThe employee contribution: 10% of basic pay | The employer contribution: 18.5% of basic payThe employee contribution: 10% of basic pay | No contribution |
| Lump sum | 60% of the corpus | 1/10 of the last drawn salary till the completion of six month | 40% of the total annuity |
| Inflation | There is no provision for the increment of DA | It is inflation-protected | The inflation is adjusted according to the DA |
| Taxation | There are no tax benefits | It has not yet been decided | 60% of the annuity is tax–free. Meanwhile, the 40% is remains taxable |
How to avail of the Unified Pension Scheme?
The Unified Pension Scheme can be availed by the pensioners:
- If you are a Central Government employee, then they can opt for the UPS. Moreover, if you are already enrolled in NPS then you can opt for UPS without an issue.
- An individual needs to be a Central Government Employee or State Government as of 1st April 2025.
- An individual needs to stay in the service for at least 10 years to receive ₹ 10,000.
- The beneficiary will receive a guaranteed pension if they have worked for more than 25 years from any Governmental department.
Pros and Cons of Unified Pension Scheme
Some of the pros and cons of the ups pension scheme retirement are:
Pros:
- A minimum pension of 10,000 will be received.
- The family gets the pension if the Pensioner dies before maturity.
- Guaranteed pension of 50% of the average basic pay for the twelve months till the retirement date.
- It protects against inflation by proposing the ALL India Consumer Price Index regarding Industrial Workers.
Cons:
- There is less provision for pension amount revision.
- There is a necessity for the contribution from the employees.
- There is no clear procedure for following the migration between the NPS to UPS.
FAQs for Unified Pension Scheme
1) What are the eligibility criteria for the unified pension scheme?
This scheme is only open to the Central Government of India and comes under the range of the National Pension Scheme (NPS).
2) What is the minimum amount provided under the unified pension scheme?
The minimum amount of Rs 10,000 per month has been provided under the unified pension scheme
3) What is the lump sum withdrawal for UPS?
The beneficiaries of the UPS will receive a withdrawal of 60% after reaching maturity.
4) How to calculate UPS Pension?
The UPS calculator doesn’t provide an accurate amount of pension but it can provide a rough estimation. However, under UPS we can get assured income of 50% of the basic pay before 12 months of retirement.
5) How to calculate the lumpsum amount in UPS?
The lump sum amount for the UPS can be calculated by following the formula i.e. 1/10 of BP* (1+DA%)*L.
