What exactly is UPS Scheme?, Who is UPS Scheme applicable to? What is the important use of this UPS scheme? Will the NPS scheme be cancelled! Or continue as it is! Now let us know about many more such things.
This scheme is applicable only to government employees. It is:
1. Central Government Employees 2. State Government Employees..
This new scheme is easy to understand if you know about OPS scheme before knowing about this scheme.
Let us first know what is OPS full form. But the full form of OPS is : Old Pension Scheme.
OPS Scheme This OPS scheme is applicable to those who have joined the government job before the year 2004.
Guaranteed pension was coming in this scheme. That too, the pension was increased every year based on inflation in the previous scheme. (DA Hike)
Ex : --
50,000/- increased to 60,000/- due to slight inflation..
In future, if a retired government employee who is drawing pension dies, then the pension will be transferred to his wife. That too she used to get pension in this scheme till her death.
But after retirement in this OPS, the government employee gets 50% pension on the last month's salary drawn by him.
Ex : -- Monthly salary of the employee before retirement : ---- 50,000/- Now 50% pension was coming on this salary. That means 25,000/- pension!
That too, the pension was increased every year based on inflation in the previous pension scheme. This is called inflation indexation. In any case, as the prices increased, so did the pension.
Ex : -- 25,000/- pension will increase to 35,000/- after 20 years due to slight hike..
But now if the employee who is getting this 25,000/- pension dies then that pension would be transferred to his wife.
But in OPS the wife gets 50% of the last pension taken by her husband. That is :--- Now her husband who was getting this 25,000/- pension died, so she used to get 50% pension i.e. 12,500/-.
It should also be said that it does not mean that 50% pension was coming as long as she was there. There was a condition here.. It was just that She used to get 50% pension for 7 years (limited year 67 years) from the time of her husband's death. But if she was 65 years old at the time of her husband's death, then she would have received 50% pension only for 3 years. Not so, if she was 52 years old at the time of her husband's death, then she would have received 50% pension only till she reached the age of 59 years. After that 30% pension was coming.
Ex : --- Then her husband who was getting this 25,000/- pension died, so she was getting 50% pension i.e. 12,500/-. But now it is 30% so the pension would have been 7,500/-. It means simple max limit 67 years. After that 30% pension was coming.
In this way OPS Old Pension Scheme has many benefits. Pension used to come without taking even a single rupee from our salary. Also, after our death, the pension would come to the wife.
Due to this old pension scheme, there was a lot of loss to the government. That is why it was abolished in 2004 and the National Pension Scheme was introduced.
First NPS full form is National Pension Scheme / New Pension Scheme Initially this scheme was only for government employees. But since 2009, the scheme has been amended to allow private employees and anyone else to apply. It means that government employees have to apply for this scheme only till Apr 1 2025. After that they can continue to UPS or within this i.e. NPS. That means there are 2 options. 1. Can continue in NPS scheme itself 2. Can directly apply to UPS scheme. But only those who are normal people i.e. government employees can continue in NPS. But this NPS scheme will continue without cancellation.
But in OPS not even a single rupee is deducted from salary for pension. But those who have joined the government job after 2004 will get deduction from salary for pension. How much is deducted from basic pay or up to 10% of their salary.
Along with your money, the government also adds 14% to your pension. That means total 10% + 14% of NPS will be added on basic pay. The fund manager in this scheme reinvests our money. By doing this as part of this scheme, you will get a return of up to 14%. But this is not guaranteed. Because the fund manager reinvests our money in the stock market. It is market linked.
Now suppose a girl named Geetha joins the job. But till she reaches 60 years, the money will be invested every month. After 60 years a corpus is generated by combining the original + return. In this, after 60 years, 60% of the money will be directly deposited in the account. Ex : Suppose this corpus is 50 lakhs. 60% of the money will be directly deposited in her account. The remaining 40% of your money is reinvested. Fixed pension will be given till it becomes zero. But in this, like in OPS, the pension will not come until she dies. When this 40% money becomes zero then the pension will stop.
Due to the disadvantages of NPS, the central government brought the UPS scheme due to the opposition of the employees.
Let us first know what UPS Full Form is. the full form of UPS is : Unified Pension Scheme.
In this scheme we have to save some % from our salary for pension. It is already known that it is also in NPS. But 10% should be paid in this scheme. But instead of 14% as in NPS, the government adds 18.5% for pension. So the benefit here is that the government pays an extra 4.5% for our pension.
If an employee is in ups scheme after retirement, 50% pension will be given on the average of the 12 months salary drawn by that employee before retirement.
Ex : Suppose an employee named Geetha retired today. Now the salary average of last 12 months drawn by this employee is calculated.
Every month (up to last 12 months) the salary drawn by this employee is calculated and averaged. Now 50% pension is given on this average. But in this new scheme, the pension will definitely come till the death of this employee. But there are some conditions. They are: According to the service rendered by the employee 50% pension if 20 years of service 30% pension if 15 years of service 10 years of service will get 20% pension. But if you do less than 10 years of service, you will not get pension. But if such people are in NPS scheme, they will get pension to some extent.
Another benefit is that the pension (inflation dependent) increases with this UPS scheme.
Yes. In this too, if the employee dies, the pension will be transferred to his wife.
But what percentage of pension will be transferred to the wife in this new UPS scheme?
60% of the last pension taken by her husband till her death.
Those who join the government job after 1 Apr 2025 have 2 options. They are :-- 1. NPS 2. UPS Either of the above two can be chosen.
Yes. You can definitely switch from NPS to UPS.
After 60 years, you will get back as much money as you have invested. There is no doubt about it.
Yes. This NPS scheme along with the newly introduced UPS scheme will continue without cancellation.