NPS vs UPS: The central government is providing the benefits of the NPS and UPS schemes to benefit the people. Employees can choose between these two. Actually, the last date to choose is September 30. Earlier, the original deadline was June 30, but the Finance Ministry later extended it for three months. On the other hand, NPS provides market-linked growth based on the contribution made by the government employee. This scheme is designed to increase term capital. With this, employees can accumulate a strong fund for retirement. The second plan is UPS, in which a minimum guaranteed pension is received.
Know what is NPS scheme is
For information, let us tell you that the NPS scheme was started in 2004 in place of OPS for government employees. At the same time, in 2009, it was expanded to include private sector employees, self-employed professionals, and non-resident Indians. Employees make regular contributions in the NPS scheme, after which 40 percent of the accumulated amount should be used to buy an annuity on retirement. On the other hand, 60 percent of the remaining amount is received as tax tax-free amount at once.
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Advantages and disadvantages of NPS
Talking about the benefits of NPS, there is a provision to withdraw 60 percent of the amount at once at the time of retirement. Along with this, tax benefits are received under Section 80C, 80CCD (1B), and 80CCD (2) of the Income Tax Act.
On the other hand, talking about the disadvantages of NPS, there is no guarantee of a pension in it. Apart from this, 40 percent of the amount has to be used for the annuity scheme, which immediately reduces liquidity.
Know what is UPS scheme is
A guaranteed pension is received in the UPS scheme. At present, it provides cover to all the central government employees. Who already come under NPS. Therefore, employees choose the option of shifting to UPS. This scheme provides a pension of 50% of the average salary of the 12 months before retirement to employees with 25 years or more of service.
Employees who have worked for 10 years or more are paid a monthly pension of at least Rs 10,000 at the time of retirement. In case of the death of the pensioner, 60% of the final pension is given to his family. Employees contribute 10% of their basic salary and DA, while the government contributes 8.5%.
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Know the advantages and disadvantages of UPS
Talking about the advantages of UPS, a pension is provided on the basis of basic salary. Family pension ensures financial security for the dependent. It keeps changing on the basis of the inflation rate. Along with this, the benefit of gratuity is also available in it
Talking about the disadvantages, it is not provided to those who retire before their time. In the market, it keeps changing compared to NPS.
Which one to choose between the two
NPS gives government employees the option to choose their investment option and fund manager. It provides tax benefits under various sections of the Income Tax Act. It is suitable for those employees who wait for growth in the market.
Now talking about UPS, employees who have served for at least 25 years get the benefit of a pension equal to 50% of the average salary of the last 12 months. It is suitable for those government employees who want a safe and secure retirement income.