Explained: Features of OPS and NPS in UPS, read full details | News India

The central government, which is constantly surrounded by questions from the opposition on the issue of pension, has now found a big solution and introduced the Unified Pension Scheme i.e. UPS. With this, another new pension system has come in the country. Let us understand how it is different from the old two pension systems i.e. OPS and NPS or what are the similarities between them?

About 2 years ago, when assembly elections were held in states like Uttar Pradesh, Himachal Pradesh and Uttarakhand, the central government had to face a lot of opposition regarding the new pension scheme or National Pension System i.e. NPS. After this, from the assembly elections of big states like Rajasthan, Madhya Pradesh and Chhattisgarh to the 2024 Lok Sabha elections, the opposition increased the tension of the central government on this issue. In such a situation, before the elections in states like Haryana, Jharkhand, Maharashtra and Bihar, the government has started the Unified Pension Scheme i.e. UPS as a solution. After all, why is this new pension system so special and how is it different from the old NPS or OPS?

UPS has been designed in such a way that it attempts to incorporate the points of both the previous pension systems. When the government was facing opposition on NPS, Finance Minister Nirmala Sitharaman had indicated that the government may consider reforming NPS to provide a fixed pension to government employees, and now the government has come up with UPS.

Features of UPS

UPS launched by the government brings with it a fixed pension along with several added benefits like family pension, minimum pension, gratuity and dearness allowance.

• A government employee in UPS will get an assured pension equal to 50 per cent of the average basic pay earned in the last year of his service after retirement. However, this benefit will be available only to those who have completed 25 years of service.
• Even if you leave the government job after working for 10 years, you will still get the fixed minimum pension of Rs 10,000, that is, to get pension in UPS, you will have to work for 10 years.
• UPS also provides assured family pension. On the death of an employee, 60 per cent of the pension will be given immediately to his family.
• The benefit of dearness allowance will be available on assured pension, assured minimum pension and assured family pension. This will be according to the All India Consumer Price Index for industrial workers.
• In this pension scheme, gratuity as well as retirement will be paid. To ensure that the employee gets adequate payment on retirement, 1/10th of the salary and dearness allowance will be added to the gratuity after the employee completes every 6 months of service. This payment will not affect the fixed pension of the employee.
• For UPS, the employee has to contribute 10 percent of his basic salary. While the government will deposit 18.5 percent of the basic salary. This scheme will be implemented from April 1, 2025.

How is UPS different from NPS?

• Although the government has retained the employee contribution option in UPS like NPS, it has added several features to it which make it a better pension scheme.
• The biggest objection to NPS was the availability of assured pension. UPS has found a solution to this.
• In NPS, the employee had to contribute a total of 10 percent of his basic salary and dearness allowance. Whereas the government's contribution was 14 percent of the basic salary and dearness allowance.
• In NPS, when you withdraw your money after retirement, 60% of the amount is tax free. Whereas, according to the salary bracket, tax had to be paid on 40% of the amount.
• Another problem with NPS was that you had to buy an annuity plan with 40 per cent of the corpus for regular pension, while your entire retirement corpus was determined based on market returns.

How effective is UPS compared to OPS?

Government has added many benefits of OPS to UPS but there are few things which differ from UPS to OPS.

• To get a guaranteed pension in UPS, you have to complete at least 25 years of service. In such a case, if the retirement age is 60 years, then you have to join a government job till the age of 35 years. Otherwise your pension will be adjusted according to the minimum pension.
• The big question in UPS is whether SC, ST and OBC get age relaxation in government jobs. In many states, the age for joining government service is up to 40 years, after which they will not get guaranteed pension benefits. Whereas there is no such condition in OPS.
• Employees were not required to contribute to the OPS, as it was entirely funded by the government.
• While in OPS the employee gets 50 per cent of his last completed salary as pension, in UPS, an employee gets an assured pension equal to 50 per cent of his average basic salary of the last 12 months.
• Pension in OPS is tax free, which is not the case in UPS. At present, this benefit is available only to those government employees who joined service before January 1, 2004.