There is a lot of enthusiasm among people about the Unified Pension Scheme (UPS) announced by the central government, as it is set to provide a new direction for future pension plans. This scheme is especially important for those who are about to retire or those who are planning their retirement, as they want to know how much pension they will receive under this scheme. The scheme was introduced on 24 August 2024 and officially notified on 24 January 2025. It will come into effect on 1 April 2025. If you retire today with a basic salary of ₹40,000, what will your estimated pension be? Let’s first understand some important points related to UPS.
The government launched the Unified Pension Scheme (UPS) as an alternative to the National Pension System (NPS). Under this scheme, employees have the option to choose either NPS or UPS. Under UPS, employees will contribute 10 percent of their basic salary, while the government will contribute 18.5 percent.
Important Information About the Pension Scheme:
- Beneficiaries: Central government employees
- Employee Contribution: 10% of basic salary and dearness allowance (DA)
- Employer Contribution: 18.5% of basic salary and dearness allowance (DA)
Pension Benefits:
- Retirement Pension: If the employee completes at least 25 years of service, they will receive 50% of the average basic salary of the last 12 months as a pension at the time of retirement.
- Minimum Pension: Employees who complete a minimum of 10 years of service will receive a pension of ₹10,000 per month after retirement.
Minimum Assured Pension under UPS & Family Pension
The Unified Pension Scheme (UPS) guarantees a minimum pension of ₹10,000 per month, provided the employee has completed at least 10 years of service. Regular and timely contributions are required, and withdrawals should not be made prematurely.
Family Pension:
If the pensioner passes away after retirement, their wife (if married) will receive 60% of the family pension. This amount will be equal to 60% of the pension received by the pensioner. This facility applies in case of superannuation, voluntary retirement, or retirement under FR 56(j).
UPS Calculator: How Much Will Your Pension Be After 25 Years of Service?
If an employee completes 25 years of service, and the average basic salary of the last 12 months is ₹40,000, they will receive a pension of ₹20,000 per month, according to the UPS Calculator. This is based on the pension scheme under the Unified Pension System (UPS).
Pension Calculation Example:
- Average basic salary: ₹40,000
- Service period: 25 years
- Pension Calculation: ₹40,000 × 50/100 = ₹20,000 per month
This shows how the pension after retirement is calculated based on the employee’s service period and last salary.
How Does the UPS Calculator Work?
The UPS Calculator helps you estimate your monthly pension amount. It also provides details about the family pension that will be given to your family after your death, ensuring their financial security.
How to Use the UPS Calculator:
To calculate your pension, use the UPS calculator by entering the following information:
- Monthly average basic pay/salary – The average of your regular income.
- Service period (in years) – The number of years you have served.
- Pension amount or family pension amount – The estimated pension you or your family will receive.