New rules from April 1: The Pension Fund Regulatory and Development Authority (PFRDA) has issued new rules to implement the Unified Pension Scheme (UPS) under the National Pension System (NPS).
The new rules will come into effect from April 1, 2025. With the help of these rules, the eligibility criteria and process for choosing UPS for central government employees has been decided.
Who can nominate for this?
These rules apply to three categories of central government employees. That is, three types of employees can enroll themselves under these rules:
- Existing employees – Those employees who come under the National Pension System (NPS) till April 1, 2025.
- New recruits – Employees who will join the Central Government on or after April 1, 2025.
- Retired employees – Employees who were earlier covered under NPS and have retired on or before March 31, 2025, or have taken voluntary retirement, or have retired under Fundamental Rule 56(j).
Please note that if a subscriber dies before choosing UPS, then his legal wife (married spouse) can enroll in the UPS scheme.
How to enroll in UPS?
The process of enrollment in the Unified Pension System (UPS) for central government employees will start from April 1, 2025. Eligible employees can submit their enrollment and claim forms online through the Prot CRA portal (https://npscra.nsdl.co.in). Apart from this, they can also opt for physical submission if they wish.
Government employees will be able to choose either Universal Pension System (UPS) or National Pension System (NPS).
What is Universal Pension System (UPS)?
The new scheme continues to be contribution-based like NPS, while also offering a fixed pension benefit similar to OPS.
Under UPS, government employees will get a guaranteed pension of 50% of their average basic salary drawn in the last 12 months before retirement. UPS offers several additional benefits over NPS. These include a minimum pension of Rs 10,000 per month for employees with at least 10 years of service. However, under OPS, people generally received 50% of their last salary as pension after retirement.
Difference between UPS and NPS? (Difference between UPS and NPS?)
While there is no guaranteed pension in NPS, in UPS, after 25 years of service, at least 50 percent of the last salary will be guaranteed as pension. After 10 years of service in UPS, a guaranteed pension of Rs 10,000 will be given, while there is no such provision in NPS.
Difference between OPS and UPS (OPS vs UPS)
Unlike the old pension scheme, UPS is a contributory pension scheme. In which employees will have to contribute 10 percent of their basic salary and dearness allowance (DA), while the employer (central government) will contribute 18.5 percent. The pension amount will depend on the returns of investments made in the market, which is mostly invested in government bonds.
Highlights of Unified Pension Scheme (UPS)
1. Minimum 10 years of service is required to get pension through UPS.
2. Like NPS, in this scheme also employees will have to contribute 10 percent of their basic salary.
3. The government will contribute 18.5 percent. This means that the total contribution of the employee and the government in this scheme will be 28.5 percent.
4. In this scheme, minimum assured pension of Rs 10,000 will be given every month.
5. Employees who resign from their post, or are removed or dismissed from service will not be eligible for this benefit.
6. If the employee has completed 25 years of service, then 50 percent of his average basic salary of the last 12 months before his retirement will be given as pension.
7. If the service period is between 10 to 25 years, then the pension amount will be decided on the basis of proportionate allocation.
When will withdrawal or partial withdrawal be allowed from UPS?
You can withdraw up to 25% of your own contribution after completion of the lock-in period of three years from the date of enrollment under UPS or NPS. This withdrawal can be done a maximum of 3 times.
Who is not eligible to receive assured payment under UPS?
If an employee retires before completing 10 years of service, or is removed or dismissed from service, or if he resigns, he will not be eligible for the assured payment.
How much will the family get under UPS?
In case of death of UPS subscriber, his family will get 60 percent pension. That is, 60 percent of the pension that the retired government employee was getting before his death will be given to his spouse as family pension. Let us tell you that in NPS, the amount of pension to be received by the family after the death of the employee was not fixed.
