Unified Pension Scheme Is Now Available: Key Features & How to Migrate From NPS To UPS – News18
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The Indian government introduced the Unified Pension Scheme (UPS) for central government employees under the National Pension System (NPS), effective April 1, 2025.
Unified Pension Scheme is now available for Central govt employees.
How To Migrate From NPS To UPS: The Indian government has introduced an option for the central government employees to choose the Unified Pension Scheme (UPS) under the National Pension System (NPS). UPS allows them to receive an assured payout after their retirement. The UPS has become operational from April 01, 2025.
What Is UPS (Unified Pension Scheme)?
Basically, UPS is a fund-based payout system which relies on the regular and timely accumulation and investment of applicable contributions (from both the employee and the employer (the Central Government) for grant of monthly payout to the retiree.
How Does UPS Different From NPS?
While NPS is market-linked with returns depending on equity and debt performance, UPS offers assured pension payout based on last drawn salary.
NPS is subject to market fluctuations, while UPS has low-risk, as pension is guaranteed.
NPS’s amount will depend on corpus accumulated through investments. UPS, on the other hand, minimum assured pension of Rs 10,000 per month after 10 years of service.
What Are Tax Benefits Under NPS and UPS?
Employer contributions up to 14 per cent and 10 per cent are exempt from the income tax. UPS also has the same provision but it additionally provides 8.5 per cent contribution from the government.
Once Employees under NPS opt for UPS, they can’t go back to NPS.
UPS Calculator: How To Calculate Pension Under UPS
The rate of full assured payout will be @50% of 12 monthly average basic pay, immediately prior to superannuation. Full assured payout is payable after a minimum 25 years of qualifying service. In case of lesser qualifying service period, proportionate payout would be admissible.
A minimum guaranteed payout of Rs. 10,000 per month shall be assured in case superannuation is after 10 years or more of qualifying service subject to timely and regular credit of contributions and no withdrawals. In cases of voluntary retirement after a minimum 25 years of qualifying service, assured payout will commence from the date on which the employee would have superannuated if he had continued in service.
The contribution of employees will be 10% of (basic pay + Dearness Allowance). The matching Central Government contribution will also be 10% of (basic pay + Dearness Allowance). Both will be credited to each employee’s individual corpus.
Further, Central Government shall provide an additional contribution of an estimated 8.5% of (basic pay + Dearness Allowance) of all employees who have chosen the UPS option, to the pool corpus on an aggregate basis. The additional contribution is for supporting assured payouts under the UPS option.
How To Switch To UPS?
Switching to UPS is straightforward and can be done either online or offline. Follow these steps:
1. Visit the official CRA portal at https://www.npscra.nsdl.co.in/ups.php.
2. Navigate to the UPS migration page.
3. Select UPS from the available pension options.
4. Complete the online application and submit the required details.
Alternatively, you can:
1. Obtain the physical UPS migration form.
2. Fill in the necessary details.
3. Submit the form to the designated government office.
Currently, UPS is available only for central government employees. State governments will decide separately whether to adopt this scheme for their employees.
