The central government made a big announcement on Saturday to launch a unified pension scheme. Earlier it was considered to be a middle path between NPS and OPS, but on Tuesday the Finance Minister clarified that it is different and better than NPS. Now people have a question in their mind that how is this so? Let us understand through calculation that if someone’s salary is Rs 50,000 per month, then how can one get more pension through UPS than NPS.
What is special in UPS?
To understand the entire calculation, it is important to first know what is special in the Unified Pension Scheme introduced by the government, which makes it different from NPS. So let us tell you that full pension will be available only when an employee has completed 25 years of service. The pension amount will be 50 percent of the average basic salary of the last 12 months. Apart from this, there is also a provision of minimum assured pension in UPS, under which a pension of at least Rs 10,000 per month will be confirmed after working for 10 years. In UPS, in the family pension category, 60 percent of the pension will be given to his family on the death of the employee. Along with all these pensions, the benefit of dearness relief i.e. DR is also available.
This is the big difference between NPS and UPS
Talking about the big difference between National Pension Scheme and Unified Pension Scheme, in NPS the employee contributes 10% of his salary and the contribution given by the government is 14%, the total amount deposited in the NPS account is equal to 24% of the employee’s salary. On the other hand, in UPS the employee contributes only 10%, but the contribution from the government is not 14%, but 18.5%. Overall, 28.5% of the salary will be deposited in the UPS account.
Calculation of pension
Now let’s talk about how an employee can get more pension through UPS than NPS. So let’s understand this on the basis of a calculation. First let’s talk about how much funds an employee earning Rs 50,000 per month will be able to raise in both the schemes (Govt Schemes).
In NPS, on the basis of a salary of Rs 50,000, the employee’s monthly contribution will be Rs 5,000 at the rate of 10% and 14% of this will be Rs 7,000 to the government. This will increase the amount deposited in the NPS account to Rs 12,000. National Pension Scheme is a scheme linked to the stock market, in which on making contribution, up to 60% of the amount is given as lump sum at the time of retirement and the remaining 40% amount is given as annuity. Let us assume that it gives a return of 9% and the deposit increases by 5% annually and the annuity gives a return of 6%, then in 35 years the total fund in NPS will be Rs 3,59,01,414. Out of this, it will be around Rs 1.43 crore. According to this, you will get Rs 77,000 as pension every month.
Pension will be made according to this in UPS
In UPS, the entire fund of the account will remain with the government. In return, the employee will be given 10 percent of the salary in lump sum after completing every 6 months of service. There will be 70 half-years in a 35-year job. If we consider the average salary of Rs 50,000, then Rs 30,000 will be received for every half-year. In this way, a total of Rs 21 lakh will be received in lump sum after completing 60 years. However, this amount will also increase with the increase in salary. Apart from this, the pension will be 50 percent of the average basic salary of the last 12 months.
If we calculate 35 years of service, the starting salary is Rs 50,000 and suppose by the last 12 months of service your basic salary becomes Rs 1,00,00, then your pension amount will be Rs 50,000 per month and if we add 50% dearness relief (DR) as per the current rate, then the total pension becomes around Rs 1,0000. In such a situation, UPS will give more pension than NPS.
Source (PTI) (NDTV) (HINDUSTANTIMES)