Unified Pension Scheme Archives

Will Unified Pension Scheme substantially impact NPS? – Times…

26 August 2024
by admin

Unified Pension Scheme: The government’s newly announced pension scheme, unveiled on Saturday, has the potential to significantly affect the National Pension System (NPS) if a majority of central government employees opt for the Unified Pension Scheme (UPS), as is anticipated.
However, according to an ET report, this impact may be mitigated if the NPS is designated to manage the individual pension fund, which is one of the two funds proposed under the UPS.
The individual fund will comprise the employee contribution, amounting to 10% of basic pay and dearness allowance, along with a matching contribution from the government.

Pension Scheme Subscribers

An additional government contribution of 8.5% of basic and DA for all employees will be maintained in a separate fund.
Presently, the NPS has 2.65 million central government subscribers, representing 27.1% of the scheme’s total corpus of Rs 12.8 lakh crore. The fate of this corpus remains uncertain as central government employees transition to the UPS, the financial daily’s report said.
The implementation of the new scheme is set to commence from April 1, 2025. If state governments also introduce UPS-like schemes and provide NPS subscribers with the choice to switch, the impact would be even more significant.
Also Read | Unified Pension Scheme vs OPS vs NPS: How is UPS different from National Pension Scheme, Old Pension Scheme?
The NPS currently has 6.7 million subscribers from states, accounting for 49.4% of the total scheme corpus. Collectively, state and central government employees make up more than three-quarters of the scheme’s corpus, according to the most recent data. The corporate sector subscribers amount to 2.1 million, with a total corpus of Rs 1.89 lakh crore, constituting 14.8% of the total.
The scheme offers tax benefits on contributions, and upon maturity, 60% of the corpus can be withdrawn tax-free, while the remaining balance must be used to purchase an annuity.

Science & Environment

Unified Pension Scheme vs OPS vs NPS: How is…

26 August 2024
by admin

UPS vs OPS vs NPS: The Modi government has introduced a new pension scheme called the Unified Pension Scheme (UPS) for central government employees who joined the service after January 1, 2004. This scheme, which will be implemented from April 1, 2025, guarantees a pension equal to 50% of the basic salary. The decision to introduce UPS comes in response to several non-BJP states reverting to the DA-linked Old Pension Scheme (OPS) and employee organizations in other states demanding the same.
Employees have the option to choose between UPS and NPS.So how does UPS compare to NPS? And how does it compare to the OPS? We take a look:

Unified Pension Scheme (UPS): Top Features

Under the UPS, employees with a minimum qualifying service of 25 years will receive an assured pension of 50% of the average basic pay drawn over the last 12 months prior to superannuation.
For service periods between 10 and 25 years, the pension will be proportional.
In the event of an employee’s demise, their family will receive an assured pension of 60% of the employee’s pension immediately before their demise.
The scheme also includes an assured minimum pension of Rs 10,000 per month upon superannuation after a minimum of 10 years of service.
The UPS will apply inflation indexation to the assured pension, assured family pension, and assured minimum pension.
Dearness Relief will be based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to service employees.
Additionally, employees will receive a lump sum payment at superannuation, calculated as 1/10th of monthly emoluments (pay + DA) for every completed six months of service. This lump sum payment is separate from gratuity and does not impact the assured pension amount.
Employees choosing the UPS will not incur any extra financial burden. Their contribution will stay at 10 percent, while the government’s contribution will rise from 14 percent to 18.5 percent.

National Pension Scheme (NPS): Top Features

NPS and the newly proposed UPS differ in terms of government contributions, pension amounts, and family pension provisions.

Under NPS, central government employees contribute 10% of their basic salary, while the government contributes 14%, according to an ET report.
The pension amount in NPS is not fixed as it is linked to market movements, whereas UPS provides an assured pension of 50% of the salary for those who joined the service after January 1, 2004.
Family pension under NPS depends on the accumulated corpus in the pension fund and the chosen annuity plan at retirement.
NPS has been implemented for all government employees, except those in the armed forces, who joined the central government on or after January 1, 2004. It is also available for private-sector employees. Most state/Union Territory governments have also notified NPS for their new employees.

Old Pension Scheme (OPS): Top Features

The Old Pension Scheme (OPS) provided retired government employees with a monthly pension equal to 50 percent of their last drawn salary. This amount was subject to increase in line with the hike in the Dearness Allowance (DA) rates. Upon retirement, employees were also entitled to receive a gratuity payment, with a maximum limit of Rs 20 lakh.
Under the OPS, if a retired employee passed away, their family would continue to receive pension benefits. Another notable aspect of the OPS was that no deductions were made from an employee’s salary towards pension contributions, which is in contrast to the NPS.

Recently, several states in India, including Himachal Pradesh, Rajasthan, Chhattisgarh, and Punjab, have made the decision to revert to the Old Pension Scheme, moving away from the NPS.

Science & Environment

How Is New ‘Unified Pension Scheme’ Different From NPS?…

25 August 2024
by admin

New Delhi: The central government introduced the Unified Pension Scheme (UPS) which is designed to offer better retirement security for government employees. Information and Broadcasting Minister Ashwini Vaishnaw announced that under this new scheme employees will receive an “Assured Pension” equal to 50 per cent of their average basic pay from the last 12 months before they retire. Employees must have at least 25 years of service to qualify for this full pension.

Key Differences Between the Unified Pension Scheme (UPS) and the National Pension Scheme (NPS)

Unified Pension Scheme (UPS):

– Pension Amount: Retirees receive 50 per cent of their average basic pay from the last 12 months of service if they have at least 25 years of service. For those with 10 to 25 years of service, the pension is proportionate to their service duration.

– Effective Date: The scheme starts on April 1, 2025. Benefits apply to those retiring by March 31, 2025, including any arrears.

– Minimum Pension: Guarantees a minimum pension of Rs 10,000 per month for employees with at least 10 years of service, providing basic financial security.

– Employee Contribution: No individual contributions required from employees; it is a defined benefit model based on salary and service length.

– Family Pension: In the event of death, the family receives 60 per cent of the employee’s pension, ensuring ongoing support.

– Eligibility: Applies mainly to employees with longer service tenures.

National Pension System (NPS):

– Pension Amount: Pension is based on returns from investments in debt and equity. There is no guaranteed fixed amount; it depends on market performance.

– Employee Contribution: Employees contribute 10 per cent of their basic salary, with the government matching 14 per cent.

– Minimum Pension: No guaranteed minimum pension; benefits depend on the accumulated corpus and annuity plan.

– Account Structure:

Tier-1 Account: Mandatory pension account with tax benefits.

Tier-2 Account: Optional investment account with flexible withdrawals.

– Family Pension: Depends on the accumulated corpus and chosen annuity plan at retirement.

– Eligibility: Applies to government employees who joined after April 1, 2004.

Science & Environment

Big News For Central Government Employees: Pensions Hiked To…

24 August 2024
by admin

New Delhi: Union Cabinet approves assured 50 per cent of salary as pension for govt employees under Unified Pension Scheme. The Narendra Modi-led central government has decided to replace the New Pension Scheme (NPS) with this new plan. The scheme will come into effect on April 1, 2025.

The decision was confirmed in a recent Union Cabinet meeting. According to Minister Ashwini Vaishnaw, the Unified Pension Scheme (UPS) will ensure a pension of 50 per cent of the average monthly basic salary over the past 12 months, aiming to provide better financial security for government employees.

#WATCH | Union Minister Ashwini Vaishnaw says, “Today the Union Cabinet has approved Unified Pension Scheme (UPS) for government employees providing for the assured pension…50% assured pension is the first pillar of the scheme…second pillar will be assured family… pic.twitter.com/HmYKThrCZV
— ANI (@ANI) August 24, 2024

Under this scheme, a dearness allowance will be attached to the pension to help offset the impact of inflation. Further, employees will receive a lump sum payment at the time of retirement. This payment will be an accumulated amount earned during their service which will be a fixed portion of their monthly salary and will increase with every six months of service.

If an employee has worked for at least 25 years, they will receive a pension of at least 50 percent of their average salary from the last 12 months before retirement. In case of the pensioner’s death, their family will receive 60 per cent of the pension amount. Further, if someone leaves their job after 10 years, they will receive a pension of Rs 10,000.

23 Million Employees To Benefit

Approximately 2.3 million central government employees will benefit from this new Unified Pension Scheme. Employees will have the option to choose between the NPS and the UPS. The Unified Pension Scheme will also include benefits linked to inflation indexing.

Tag: <span>Unified Pension Scheme</span>

Will Unified Pension Scheme substantially impact NPS? – Times…

Unified Pension Scheme vs OPS vs NPS: How is…

Unified Pension Scheme (UPS): Top Features

National Pension Scheme (NPS): Top Features

Old Pension Scheme (OPS): Top Features

How Is New ‘Unified Pension Scheme’ Different From NPS?…

Key Differences Between the Unified Pension Scheme (UPS) and the National Pension Scheme (NPS)

Unified Pension Scheme (UPS):

National Pension System (NPS):

Big News For Central Government Employees: Pensions Hiked To…

23 Million Employees To Benefit