Unified Pension Scheme- The biggest question while planning for retirement is whether our pension will be able to handle future expenses? Especially when you are a salaried class employee and expect a stable income. In such a situation, the Central Government’s Unified Pension Scheme (UPS) has come as a big relief. This scheme has been started for those employees who are worried about the instability of the National Pension System (NPS) and want a guaranteed income after retirement.
Now the government has extended the last date to join this scheme to 30 September 2025, giving employees more time to take a decision. This change has been made especially in view of the demand of those employees who want to understand this scheme well and take a well-thought-out decision. By joining UPS, employees can get benefits like 50% fixed guaranteed, income increasing according to inflation and death and retirement gratuity.
New date and procedure for application
The central government has extended the last date for joining UPS by three months to 30 September 2025 in view of the demands received from employees, retired employees and their families. This decision was taken because many employees had expressed the need for additional time to understand the scheme and take a decision. The option to join UPS is completely voluntary. This means that employees covered under NPS can choose UPS of their own free will. The application process is online, and employees can complete it easily. If an employee does not opt for UPS by September 30, it will be considered that he will remain with NPS.
Main advantages of UPS
UPS is specially designed for those employees who want a fixed pension after retirement. Under this scheme, employees who complete 25 years of service will get 50 percent of their average basic salary of the last 12 months as pension. If the employee’s service is 10 years or more, then a monthly pension of at least Rs 10,000 is guaranteed. Apart from this, if the employee dies, his family will get 60 percent of the pension.
UPS also includes benefits like retirement and death gratuity, which were earlier available in NPS. Also, this scheme also has a provision to increase the pension according to inflation, so that the income of the employees remains stable even after retirement.
Difference between UPS and NPS
NPS is a market-linked pension system in which returns depend on the performance of the market. UPS, on the other hand, is a guaranteed pension scheme that gives employees the security of a fixed income after retirement. In UPS, the government contributes 18.5 percent of the employee’s salary, out of which 10 percent goes to the employee’s pension account and the remaining 8.5 percent goes to a pool fund that supports guaranteed pension.
Apart from this, employees in UPS can withdraw up to 60 percent of their total deposit at the time of retirement, although the status of tax exemption on this withdrawal is not yet clear. Compared to NPS, UPS is more attractive for employees who want to avoid risk and prefer fixed income.