There is big news for those Central Government Employees who are currently in the National Pension System (NPS) and want a fixed pension after retirement. You have time till 30 June 2025 to join the Unified Pension Scheme (UPS). If you want to take advantage of this new pension scheme, apply before 30 June 2025. After this, your name will automatically remain in NPS. What is the difference between UPS and NPS, and who can apply for UPS? Let’s know the complete information in detail.
Why choose the UPS scheme
The Unified Pension Scheme (UPS) is similar to the Old Pension Scheme (OPS), in which a fixed amount is received every month after retirement. There are many great benefits available under UPS:
If 25 years of service is completed, 50% of the average basic salary of the last 12 months before retirement will be given as a pension. This guarantees your future financial security.
If the employee has served for at least 10 years, he will get a pension of at least ₹ 10,000 every month. This is a big relief for those who have a short service period.
After the death of the employee, his wife/husband will continue to receive 60% of the pension. This is a strong support for the family.
Like the government, Dearness Allowance (DA)/Dearness Relief (DR) will also be applicable on the pension received under UPS. This will maintain the purchasing power of your pension with rising inflation.
On retirement, 10% of the salary will be given as a lump sum for every 6 months of service. This is an additional financial support that can come in handy after retirement.
How to choose UPS
The government has also started an online service for employees to join UPS so that they can make the change themselves. For this, you have to visit the e-NPS portal and follow these steps:
Open the portal and go to the “Unified Pension Scheme” section.
Enter your PRAN (Permanent Retirement Account Number) and Date of Birth, then fill in the captcha.
An OTP will come on your registered mobile number/email, enter it and verify.
Fill out a declaration form stating that you accept UPS as your final and unilateral decision.
E-sign it (with Aadhaar or Virtual ID (VID)).
Download the acknowledgment.
Offline
If you wish to follow the offline process, download Form A2 and submit it to your department’s nodal office.
What is the main difference
You need to understand both these pension schemes so that you can make the right decision:
NPS (National Pension Scheme)
In this, a part of your salary is invested in the market (shares, debt, etc.), and the pension is based on the return on this investment. There is no fixed monthly pension, and market fluctuations can affect your pension.
UPS (Unified Pension Scheme)
It provides a fixed and guaranteed pension after retirement, which is based on the basic salary of the employee. This plan is free from market risks and ensures a stable income.
Which plan is best for whom?
Deciding which plan is best for you depends on your financial situation and risk appetite:
Who is NPS best for
If you have 15-20 years left for retirement, you understand investing and are willing to take risks in the stock market, then NPS may be more beneficial for you as it has the potential for high returns.
Who is UPS best for
If you want a stable and fixed income after retirement and want to avoid market risks, then UPS is a better option for you. It is ideal for those who prioritize financial security and peace of mind.