look news india
UPS vs NPS: Central government employees will now have the option to remain in the National Pension Scheme (NPS) or adopt the new pension scheme Unified Pension Scheme with guaranteed pension. UPS will benefit 23 lakh central employees as under this scheme they will get assured pension which was not there in NPS. The Unified Pension Scheme will come into effect from April 1, 2025 and employees who are currently associated with NPS can also switch to UPS if they wish.
In the Unified Pension Scheme, the average of basic salary + DA of the 12 months before retirement will be given as a fixed pension. Employees will get this as pension on retirement but the necessary condition for this is that the employee has worked continuously for at least 25 years. In the Unified Pension Scheme, employees will have to give 10 percent of their basic salary and DA in UPS to the pension fund as they have been giving in NPS. However, the government will contribute 18.5 percent to the pension fund which was 14 percent in NPS.
UPS or NPS- who will give more pension?
The government is going to implement UPS from next year. But the question is arising that after adopting any pension scheme in UPS or NPS, will the central employees get more pension after retirement. Suppose if a person started a government job at the age of 25 and at the time of joining the job his basic salary is Rs 50,000 per month, then after working for 35 years when he retires, there can be a huge difference in the pension and total retirement benefits received under UPS and NPS. According to an estimate, on retirement under UPS, the employee will have a total pension corpus of Rs 4.26 crore, after which he is expected to get a pension of Rs 2.13 lakh every month. If the employee adopts NPS, he will get Rs 3.59 crore as pension corpus and about Rs 1.79 lakh as pension every month.
Under the Unified Pension Scheme, the government will contribute 18.5% to the employees' pension fund, which is only 14% in NPS. Due to this, a big difference is seen in the pension corpus of the employees. Regarding whether employees should remain in NPS or choose the Unified Pension Scheme with guaranteed pension, Dhirendra Kumar, CEO of Value Research, suggested in a Moneycontrol report that central employees should remain in NPS till retirement to get returns from the equity market.
