UPS vs NPS vs OPS: After a long demand of government employees, the government has approved the Unified Pension Scheme (UPS). How different is this pension, which will be implemented from April 1, from the already running OPS and NPS and which one benefits the employees more. Let’s know?
UPS vs NPS vs OPS: Government employees across the country were demanding the restoration of the Old Pension Scheme (OPS) for a long time. Before the Lok Sabha elections, the old pension was restored by the then Punjab, Chhattisgarh, Jharkhand, Himachal Pradesh and Rajasthan governments. But the Center has refused to restore it. But the central government had accepted the demand of the employees in which a guarantee was being demanded under the New Pension Scheme (NPS) by making changes in it. Now the Modi government has taken a big step on this and launched the Unified Pension Scheme (UPS). It will be implemented from 1 April 2025.
What is the provision to get 50% pension
Under the new pension scheme, 50% of the average basic salary will be given as pension in the last 12 months before retirement. But this benefit will be available only if an employee has worked for a minimum of 25 years. Apart from this, different benefits are available under the new pension scheme. Like guaranteed pension, guaranteed family pension, guaranteed minimum pension, indexation linked inflation and additional payment apart from gratuity. But you should know the difference between Unified Pension Scheme (UPS), New Pension Scheme (NPS) and Old Pension Scheme (OPS). Let us know which one is more beneficial for the employee?
Benefits of Old Pension Scheme (OPS)
Under the Old Pension Scheme (OPS), 50% of the employee’s salary is fixed to be given as pension at the time of retirement. There is also a provision of General Provident Fund (GPF) in OPS. In this, the employee can invest a fixed part of his salary, which he gets back with interest at the time of retirement. Under OPS, the employee is entitled to get a maximum gratuity of Rs 20 lakh. In OPS, pension is given to the employee from the government treasury. On the death of the retired employee, his family gets the benefit of pension. There is no deduction from the salary of the employee for OPS during the job. Apart from this, there is also a provision of getting Dearness Relief (DR) every six months, which provides relief from rising inflation.
What are the provisions under New Pension Scheme (NPS)?
Under the New Pension Scheme (NPS), 10% of the employee’s basic salary and dearness allowance (DA) (both combined) is deducted for the pension fund. Apart from this, 14 percent of the basic salary is contributed by the government. The New Pension Scheme is linked to the stock market, which simply means that the pension of a government employee depends directly on the fluctuations of the market. It is not completely risk free. There is also a provision of tax on the amount received in this. To get pension on retirement, 40% of NPS should be invested in annuity. NPS does not offer guaranteed pension after retirement, due to which government employees have been protesting for a long time. How much your pension will be depends on the performance of your fund. Unlike OPS, there is no adjustment of dearness allowance (DA) after retirement in NPS.
Understand Unified Pension Scheme (UPS)
In Unified Pension Scheme (UPS), the employee will not be responsible for funding the pension. In this, the government will bear 18.5 percent of the basic salary of the employees on its behalf. Being a guaranteed pension scheme, employees working for at least 10 years will be entitled to a minimum pension of Rs 10,000. Apart from gratuity, a lump sum amount is given at the time of retirement in UPS. Under this, retiring employees will be entitled to receive 50% of the average basic salary in the last 12 months as pension. If an employee dies before retirement, 60% pension will be given to the husband or wife as family pension. Under UPS, the benefit of inflation indexation will be available, which is like dearness allowance. In this, guaranteed pension, family pension and minimum pension can be adjusted according to the inflation rate. For every six months of service, employees receive 1/10th of their monthly salary (salary + DA) as a lump sum payment.
Also Read- Which employees can switch from NPS to UPS, how much pension is guaranteed… know everything
Which one is more beneficial or which one will give more money?
After Old Pension Scheme (OPS), New Pension Scheme (NPS), now the government has introduced Unified Pension Scheme (UPS). But there is a discussion among government employees and common people about which one is more beneficial for the employees. Let us tell you that UPS is more beneficial than NPS, this is certain. Forum of MCD Engineer Association President Naresh Sharma says that it is better for the employees than NPS in many ways. Earlier, under the pension scheme, voluntary retirement was after a minimum of 20 years of service but now it has been reduced to 10 years. In the old pension scheme, employees get a large amount in the form of GPF.
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