How different is UPS from NPS and OPS? Know the difference, contribution and every important thing

The Union Cabinet headed by Prime Minister Narendra Modi took a big decision on Saturday. The Cabinet has approved the Unified Pension Scheme (UPS) for the pension of government employees. This is a new scheme of the NDA government, which has been introduced parallel to the National Pension Scheme (NPS). Now government employees will have the option to choose between NPS and UPS. At the same time, Old Pension Scheme (OPS) is also operated in many states of the country. In such a situation, most of the people are not aware of the difference and benefits of OPS, NPS and UPS. If you are also getting confused about these three pension schemes or want to know which pension scheme will be best for you, then let us answer each of your questions.

What is Unified Pension Scheme (UPS)?
This new pension scheme introduced for government employees will come into effect from April 1, 2025 next year. Under UPS, now central employees will be given a fixed pension, which will be 50% of the average basic salary of the last 12 months. To get this pension, the employee will have to serve for at least 25 years. On the other hand, if the employee dies, then the family will also be given a fixed pension, which will be 60 percent of the pension received by the employee. Apart from this, minimum assured pension will also be given, which means that those who work for 10 years will be given a pension of at least Rs 10 thousand.

Pension will increase based on inflation
Indexation has also been added under the Unified Pension Scheme. This means that the pension of retired employees will keep increasing according to inflation. This increase will be added to the pension as Dearness Allowance. It will be calculated on the basis of All India Consumer Price Index for Industrial Workers (AICPI-W). A lump sum amount will also be given on retirement. It will be calculated as 10th part of the basic salary and dearness allowance for every 6 months of service of the employees. This amount will be different from gratuity.

What is the difference between UPS, NPS and OPS?

1. Central government employees will be given benefits under UPS. Both private and government employees can open accounts under NPS. Whereas OPS is only for government employees.
2. In OPS, there is no deduction from the salary for pension, whereas in NPS, 10% (basic + DA) is deducted from the salary. The same amount will be deducted in UPS. But the government will contribute 18.5 percent.
3. OPS has the facility of GPF (Government Provident Fund), whereas NPS does not have this facility. Whereas in UPS, a lump sum amount will be given after retirement.
4. NPS is a scheme linked to the stock market, in which upon contribution, up to 60 percent of the amount is given as lump sum at the time of retirement and the remaining 40 percent amount is given as annuity. Whereas UPS and OPS are secure schemes.
5. UPS will provide a fixed pension at the time of retirement, which will be 50% of the average basic pay of 12 months. OPS will also provide a fixed pension at the time of retirement, which will be 50% of the last basic salary, while there is no guarantee of a fixed pension at the time of retirement in NPS.
6. In OPS, dearness allowance (DA) is applicable after 6 months, whereas in NPS, dearness allowance after 6 months is not applicable. Whereas in UPS, dearness relief (DR) will be given according to inflation.
7. In UPS, apart from gratuity, a lump sum amount will be given at the time of retirement. In OPS, gratuity up to Rs 20 lakh is given after retirement, whereas in NPS there is a temporary provision of gratuity at the time of retirement.
8. Family pension will be given in UPS on the death of the employee. In OPS, there is a provision of family pension in case of death during service, while in NPS there is a provision of family pension in case of death during service, but the government seizes the money deposited under NPS.
9. It is not clear yet whether interest in UPS will be taxed or not, whereas in OPS, there is no income tax on GPF interest on retirement. Whereas in NPS, tax will have to be paid on the money received on retirement based on the stock market.
10. In OPS, no investment is required to get pension at the time of retirement, whereas in NPS, 40 percent of the money from the NPS fund has to be invested to get pension at the time of retirement. There is no provision for investing in UPS either.
11. There is a provision of a minimum pension of Rs 10,000 on 10 years of service in UPS. There is a provision of 40 percent pension commutation in OPS, whereas this provision is not there in NPS.
12. Medical facility will be provided in UPS, whereas in OPS there is medical facility after retirement (FMA), but there is no clear provision for this in NPS.
13. Only government employees can avail the benefits of UPS and OPS, whereas anyone from private to government employees can avail NPS.

Some major differences between UPS and NPS?

• The government has given the employees the option to choose between UPS and NPS. If you choose NPS once, you cannot go back to UPS.
• The benefit of UPS will be only for government employees, under which 23 lakh employees will get the benefit. Whereas under NPS there are two accounts, Tier 1 and Tier 2, which anyone can open and invest.
• UPS is a fixed pension scheme. Along with this, family pension will also be available. There is also a provision for minimum fixed pension. Whereas this is not the case with NPS. UPS is a secure pension scheme, while NPS is a market linked scheme.
• In NPS, 10% (basic + DA) is deducted from the salary. The same amount will be deducted in UPS. But the government will contribute 18.5 percent.
• In UPS, a government employee will get a lump sum amount in addition to a fixed pension after 25 years of service. This pension will increase according to the inflation rate. Many employees were getting very little money in NPS.
• There was no guaranteed pension in NPS. After 25 years of service in UPS, at least 50% of the last salary will be guaranteed as pension.
• After 10 years of service in UPS, you will get an assured pension of Rs 10,000. There is no such provision in NPS.

Dues will also be received under UPS
Union Minister Ashwini Vaishnav announced the Unified Pension Scheme on Saturday night and said that the benefits of this scheme will be given to government employees. It was also said that government employees retired after 2004 will also get its benefits. Government employees retired from the year 2004 till now will be eligible to get the dues under this scheme. He said that the dues under this scheme will be paid up to Rs 800 crore.