Can You Switch from the Unified Pension Scheme (UPS) to the National Pension Scheme (NPS)?
UPS:
The Unified Pension Scheme (UPS) is a new pension scheme for central government employees in India. It was announced in 2023 and is set to be implemented from April 1, 2025.
Here are some of the key features of the UPS:
- Guaranteed pension: Employees who have completed at least 10 years of service will receive a minimum monthly pension of Rs 10,000.
- Pension amount: The pension amount is calculated as 50% of the average basic pay over the final 12 months before retirement.
- Family pension: In the event of a retiree's death, the family will be eligible for a family pension.
- Dearness relief: Pensions will be indexed to inflation through dearness allowance.
- Option to choose: Employees can choose between the UPS and the National Pension System (NPS) starting from the upcoming financial year; the choice is final once made.
Can You Switch to the Unified Pension Scheme (UPS) from the National Pension Scheme (NPS)?
The Unified Pension Scheme (UPS), recently approved by the Indian government, provides a guaranteed pension for government employees. Here are the key points regarding switching from National Pension Scheme (NPS) to UPS:
- Eligibility: Central government employees who retire on or before March 31, 2025, with arrears are eligible for UPS
- Choice: Employees covered under NPS (those who joined service after April 1, 2004) can choose between NPS and UPS. However, the decision must be made before the implementation date, and once they opt for UPS, they cannot revert to NPS
- Benefits: UPS offers a guaranteed pension, which is considered safer than NPS. Under NPS, part of the fund must be invested in an annuity, but UPS provides a more predictable income
Here are some of the frequently asked questions about the UPS:
Q. Who is eligible for the UPS? A. The UPS is applicable to 23 lakh central government employees who joined government service from January 2004.
Q. How is the pension calculated under UPS? A. The pension amount is calculated as 50% of the average basic pay over the final 12 months before retirement.
Q. What is the minimum pension under UPS? A. The minimum pension under UPS is Rs 10,000 per month.
Q. Is the pension under UPS linked to inflation? A. Yes, the pension under UPS is linked to inflation through dearness allowance.
Q. What happens if the pensioner dies? A. In the event of a retiree's death, the family will be eligible for a family pension.
Q. Can I choose between the UPS and the NPS? A. Yes, employees can choose between the UPS and the NPS starting from the upcoming financial year; the choice is final once made.
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