{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.indusind.com\/iblogs\/savings-account\/unified-pension-scheme-vs-nps\/#BlogPosting","mainEntityOfPage":"https:\/\/www.indusind.com\/iblogs\/savings-account\/unified-pension-scheme-vs-nps\/","headline":"Unified Pension Scheme and How It is Different from NPS","name":"Unified Pension Scheme and How It is Different from NPS","description":"The Unified Pension Scheme (UPS) was introduced by the Government of India in August 2024 and is expected to be fully implemented by April 2025.  This scheme is designed to offer central government employees a more secure retirement by offering an assured pension during their golden years. With its salient features, such as inflation indexation,...","datePublished":"2025-01-23","dateModified":"2025-01-23","author":{"@type":"Person","@id":"https:\/\/www.indusind.com\/iblogs\/author\/indusind_bank_pfx_team_indperformics-com\/#Person","name":"CONVONIX Antony","url":"https:\/\/www.indusind.com\/iblogs\/author\/indusind_bank_pfx_team_indperformics-com\/","image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/7d15b864167d3868c12ffdda340cc1c9?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/7d15b864167d3868c12ffdda340cc1c9?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"IndusInd","logo":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/logo-2.png","width":201,"height":86}},"image":{"@type":"ImageObject","@id":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/Unified-pension-min.jpg","url":"https:\/\/www.indusind.com\/iblogs\/wp-content\/uploads\/Unified-pension-min.jpg","height":288,"width":764},"url":"https:\/\/www.indusind.com\/iblogs\/savings-account\/unified-pension-scheme-vs-nps\/","about":["Savings Account"],"wordCount":1381,"keywords":["Savings account","savings account online"],"articleBody":"The Unified Pension Scheme (UPS) was introduced by the Government of India in August 2024 and is expected to be fully implemented by April 2025. This scheme is designed to offer central government employees a more secure retirement by offering an assured pension during their golden years. With its salient features, such as inflation indexation, the UPS proves to be a worthy competitor to its counterpart, the National Pension Scheme. Government employees who have joined the public sector after 2004 and are covered under the NPS can opt for the UPS. If you are wondering which scheme should you opt \u2013 UPS vs NPS \u2013 for a worry-free retirement, here is a guide to help you choose. Unified Pension Scheme: Meaning & FeaturesFirst, let\u2019s understand UPS in detail. \u00b7 Meaning & Scope of the Scheme:The Unified Pension Scheme (UPS) is a new pension plan for an estimated 23 lakh central government employees. If state governments also adopt UPS (Maharashtra already has, in August 2024), the list of UPS beneficiaries can go up to 90 lakh employees. This scheme is designed to provide fixed pension payouts while retaining some of the flexibility offered by NPS.\u00b7 Contribution to the Scheme:UPS is scheduled to take effect from April 2025. Under this scheme, employees contribute 10% of their basic salary plus dearness allowance (DA). The government contributes 18.5% + DA.A major difference between NPS and UPS is that the former offers a government contribution of 14%. \u00b7 Eligibility:To be eligible for UPS, employees must have completed at least 10 years of government service.\u00b7 Assured Pension Benefits:The UPS offers an assured pension equal to 50% of the average basic pay over the last 12 months before retirement. This is applicable if the employee has served for at least 25 years. Employees who retire with less than 25 years of service receive a proportionate pension, based on their service duration. \u00b7 Assured Minimum Pension:For those retiring after just 10 years of service, the scheme guarantees a minimum pension of \u20b910,000 per month.\u00b7 Assured Family Pension:In the event of the pensioner\u2019s death, the surviving spouse or eligible dependents receive 60% of the retiree\u2019s pension. This ensures continued financial support for the family post-retirement.\u00b7 Lump-Sum Payment on Superannuation:Upon retirement, employees under the UPS are entitled to a lump-sum payment. This payment will be equivalent to one-tenth of their monthly emoluments for every six months of service. This does not affect the pension amount. \u00b7 Inflation Indexation:The UPS adjusts the pension amounts based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). Thanks to this feature, the pension retains its value despite inflation.Now that you have an idea of what NPS is, let\u2019s understand the differences between NPS and UPS. How is the Unified Pension Scheme Different from NPS?When comparing NPS and UPS differences, here are the key factors you need to consider:FactorsUPSNPSGovernment Contribution18.5% of the employee\u2019s basic salary and DA.14% of the employee\u2019s basic salary and DA.Assured PensionProvides a guaranteed pension equal to 50% of the average basic salary for the last 12 months before retirement for those with 25 years of service.The pension is not guaranteed and depends on market returns. The value fluctuates based on the investments and the accumulated corpus. Family PensionGuarantees 60% of the pension to the family in the event of the pensioner\u2019s death.The family pension depends on the accumulated corpus and the annuity plan chosen.Risk and ReturnOffers no market risk and guaranteed fixed returns; suitable for risk-averse employeesSince it is a market-linked pension scheme, the returns vary based on the performance of the chosen investments. This means potentially higher returns but with greater risk.Lump-Sum PaymentProvides a lump sum without affecting the pension amount.Allows up to 60% of the total accumulated corpus to be withdrawn.Also Read: Mastering the Art of Long-Term Savings- A Complete Roadmap for Financial SuccessConclusionThe Unified Pension Scheme (UPS) provides a secure and predictable pension solution for government employees. In the UPS vs NPS debate, while NPS may lead to potentially higher returns due to the market-linked investments, UPS focuses on assured benefits and inflation protection. Retirement planning is a major element of a solid financial portfolio. Before that, however, it is crucial to have the basics right \u2013 that is, one must open a savings account online with the right banking partner. And with options, such as the feature-rich Zero Balance Account from IndusInd Bank, you not only enjoy no minimum balance requirements but also 24\/7 digital banking services, instant account opening, and more! Enjoy competitive interest rates on savings account variants amongst many other features.Open a Savings Account with IndusInd Bank today! Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct\/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.Share This:"}