By Priyanka Deshpande
CNBC-TV18.com
Published August 26, 2024
The Union Cabinet recently approved the Unified Pension Scheme (UPS) for central government employees, set to take effect on April 1, 2025. Take a look at how UPS is different from the existing national pension scheme (NPS) and the old pension scheme (OPS):
UPS: 50% of average basic pay over last 12 months before retirement. For service between 10-25 years, proportional.
PENSION GUARANTEE
NPS: No fixed pension.
OPS: 50% of their last drawn 'basic' salary as a monthly pension.
UPS: Employees contribute 10% of their salary, while the government contributes 18.5%.
PENSION CONTRIBUTIONS
NPS: Employees contribute 10% of their salary, while the government contributes 14%.
OPS: No contribution from employees; government bears the entire cost.
UPS: Linked to all India consumer price index (CPI) for industrial workers.
INFLATION PROTECTION
NPS: No standardised inflation protection; pension is market-linked.
OPS: Pension amount adjusted via dearness allowance.
UPS: 60% of the employee’s pension upon their death.
FAMILY PENSION
NPS: No fixed pension; depends on the accumulated corpus and annuity plans at retirement.
OPS: 30-50% of the employee’s pension upon their death.
UPS: Defined payment of 1/10th of monthly emoluments (including pay and DA) for every six months of service, in addition to gratuity.
LUMP SUM PAYMENTS
NPS: Market-linked, partial withdrawal allowed.
OPS: Only through pension commutation.
UPS: Clarity needed on tax benefits for both employee and government contributions.
TAXATION
NPS: 14% deduction on government contribution.
OPS: No tax benefits.