Unified Pension Scheme: The central government has launched UPS on the demand of assured pension. This scheme will come into effect from April 1. Employees can easily find out how much pension they will get every month if they choose UPS instead of NPS
The central government has introduced the option of Unified Pension Scheme (UPS) for its employees coming under the National Pension System (NPS). In this scheme, employees get assured payment after retirement. This means that their pension will not depend on the performance of the stock market and debt market. Here, NPS is a market linked pension scheme, in which the pension of the employee depends on the performance of the stock market and debt market. UPS assures a minimum pension of Rs 10,000 every month.
UPS will come into effect from April 1, 2025. If the employees coming under NPS select UPS once, then they will not have the option of using NPS again. There is a formula to calculate pension in UPS. With this formula, a person can calculate his pension.
Payout=50% of X (Sum of 12 months basic pay/12)
This formula can be used only if the employee has 25 years or more of service left. If the service left is less than 25 years, the payout will be proportionate to that. If the employee takes voluntary retirement after 25 years of service, the payout will start from the original date of retirement.
This can be understood with the help of an example. There can be one of three types of situations with an employee. In the first situation, suppose the employee’s service is 25 years or more. In this situation, suppose the employee’s average basic pay at the time of retirement is Rs 12,00,000. According to the formula, this amount has to be divided by 12. This will give the average basic pay of 12 months as Rs 1,00,000. This has to be multiplied by 50 percent. In this way, the employee will get a pension of Rs 50,000.
In the second situation, the employee’s service is less than 25 years. Suppose the employee works for 20 years. Then he retires. So the proportionate factor will be 20/25 = 0.8. In such a situation, the payout calculation will be like this. 50% X 1,00,000 X 0.8 = 40,000
The third situation is of minimum guaranteed payout. Suppose an employee’s basic pay at the time of retirement is Rs 15,000, then his payout will be Rs 7,500, which will be less than the minimum assured amount. In such a situation, his final payout will be Rs 10,000.
