Best Pension Plan: The central government announced the Unified Pension Scheme (UPS) on 24 August 2024, which will be effective from 1 April 2025. This scheme is specially designed for those government employees who are currently covered under the National Pension Scheme (NPS). The purpose of UPS is to create a balance between the Old Pension Scheme (OPS) and NPS, so that employees can get assured pension benefits.

Types of Government Pension Schemes-

OPS (Old Pension Scheme): Under this scheme, government employees get 50 per cent of their last salary as pension. There was no employee contribution in this.

NPS (National Pension System): This scheme was implemented in 2004 and under which both the employee and the government have to contribute, but the pension is market based.

UPS (Unified Pension Scheme): This scheme is going to be implemented in the year 2025 and this scheme is for the customers of NPS and it promises to provide a guaranteed pension amount. At the same time, the question comes to mind that which pension plan can be better among UPS, NPS and OPS? Today we are going to tell you this in this article.

 

Unified Pension Scheme(UPS)

Unified Pension Scheme was announced by the Central Government in 2024. The objective of this scheme is to provide guaranteed pension, family pension and minimum pension to government employees. This scheme has been implemented for central government employees.

The scheme guarantees a pension amount of 50% of the average basic pay in the last 12 months before retirement for those with at least 25 years of service. Apart from this, if an employee completes at least 10 years of service, he will be given a minimum pension of Rs 10,000 per month after retirement.

1. The scheme guarantees a pension amount of 50% of the average basic pay in the last 12 months before retirement for those with at least 25 years of service.

2. Apart from this, if an employee completes at least 10 years of service, he will be given a minimum pension of Rs 10,000 per month after retirement.

3. If the pensioner dies, 60 percent of the pension amount will be provided to his family. Government employees currently covered under the National Pension Scheme (NPS) can opt for UPS.

National Pension Scheme(NPS)-

It is a retirement scheme introduced by the Government of India in 2004 after the discontinuation of the Old Pension Scheme. Initially, it was applicable only to government employees, but in 2009, it was opened to all citizens, NRIs and self-employed individuals.

National Pension Scheme is investment based like mutual funds, where employee or individual can invest regularly and get pension after retirement. At the time of retirement, NPS customers can withdraw 60 per cent of their funds in one go, while investing the remaining 40 per cent in a pension annuity. Investing in NPS is eligible for tax exemption under sections 80C and 80CCD (1B) of Income Tax.

Old Pension Scheme(OPS)-

The Old Pension Scheme was applicable to all employees before 2004. It was a fixed guaranteed pension scheme, in which lifelong pension was given on the basis of last salary and service period of the job.

The OPS scheme promised to pay 50 per cent of the last basic pay drawn as pension to the retired employee. Pension receiving employees used to get the benefit of revision of daily allowance twice a year. If a pension receiving employee died, his family would continue to receive pension benefits. Under OPS, employees did not have to pay anything from their salary but the government paid the entire pension amount.

Which is better?

When it comes to retirement pension, choosing the right plan is very important. If you want a guaranteed and stable pension and do not want to take market risk, UPS can be a good option and you can invest separately in equities. On the other hand, if you want high returns and you understand the market, then NPS can be a good idea. If you want a pension fully funded by the government and you are eligible to join OPS, then OPS will be the safest option.