The central government has introduced an important new service for its employees.
Now, employees can calculate how much pension they will receive based on their contributions to the National Pension System (NPS) and the Unified Pension Scheme (UPS).
The NPS Trust has launched the Unified Pension Scheme Calculator, which lets employees compare estimated pensions under both NPS and UPS.
By entering some basic details, they can see their expected monthly pension under each scheme side by side. This will help them choose the most suitable pension option.
What Is the Unified Pension Scheme (UPS)?
UPS is a new optional pension plan launched by the central government. It offers both a lump sum amount at retirement and a guaranteed monthly pension.
It has been introduced as an alternative to NPS and aims to give employees a more stable and assured retirement benefit.
How Does the UPS Scheme Work?
Under the UPS, employees contribute 10% of their basic salary and dearness allowance (DA). The government matches this contribution.
This combined amount is invested either in a default plan or through a private pension fund manager (PFM), based on the employee’s choice.
If an employee completes more than 25 years of service, they will receive 50% of the average basic salary (calculated over the last 12 months) as a monthly pension.
For those with 10 to 25 years of service, the pension will be provided on a proportional basis.
Anyone who has completed at least 10 years of service will get a minimum guaranteed pension of ₹10,000 per month.
Family Benefits Included
If the pensioner passes away, their spouse will receive 60% of the pension, providing financial security for the family even after the employee’s death.
SWP-Like Payment on Retirement
In UPS, pension is paid out like a Systematic Withdrawal Plan (SWP) used in mutual funds.
If the pension fund runs out and the pensioner or their spouse is still alive, the government will continue pension payments from a common pool of funds.
Why Is the UPS Calculator Useful?
The UPS calculator helps central government employees easily compare their estimated pensions under NPS and UPS, so they can make informed decisions based on their retirement needs.
It simplifies retirement planning and helps employees pick the better option.
Currently, UPS is only available to central government employees, but state governments can also choose to offer it to their staff in the future.
