Know Detail About Unified Pension Schemes: A Big Relief for Govt. Employee

The Unified Pension Scheme is a ray of hope for many govt. Employee, which assured the sense of security and financial stability post-retirement. The new scheme arrived after many employees had already shown disinterest. 

Few states govt. because of the dismay among the employees restoring old pension schemes. Narendra Modi govt.introduces Unified Pension Schemes which will come into effect in FY 25-26. The UPS is a mixture of both the old pension scheme and the new pension scheme.

Under this scheme, employees can get 50% of their last withdrawn salary before retirement which is 50% of their average monthly salary that is withdrawn before retirement.

Everything Detail About Unified Pension Scheme - Eligibility, Annual Gratuity, and Inflation Indexation 

• Assured Pension - This is the amount that is given to the employee on a monthly basis in the form of a pension. The amount will be given to the employee who served 25 years in a govt. Services, which is 50% of their last withdrawn salary before retirement.
• Assured Minimum Pension - The minimum years of service is required which is 10 years and the pension will be proportionately to the tenure. The minimum pension is equal to 10,000/month.
• Assured Family Pension -  At the time of the retired employee's demise, their family member will be the beneficiary. They’ll get 60% of the pension that the employee is drawing before their death.
• Inflation Indexation - Over a period of time, the cost of living increases so the pensions are periodically reviewed and adjusted to maintain to the real value and purchasing power of the beneficiaries.
• Gratuity -  After retirement, an employee can get the lump-sum payment calculated after the beneficiary. This payment is calculated as 1/10th of the monthly salary + dearness allowances, which includes both pay and dearness allowances. Gratuityis a separate payment, it doesn't affect the employee's assured pension.
• The Unified Pension Scheme amalgamated the National Pension Scheme and Old Pension Scheme. But it will come into full force in the year 2025.

What is the Difference Between the Old Pension Scheme and the National Pension Scheme?

Know details about NPS 

• The National Pension Scheme was introduced in 2000 for the govt. Employees but in 2009 it covered all the sectors. NPS is the retirement investment plan for the govt. Employee have a choice to withdraw a portion of their accumulated savings while the rest of the sum will be distributed as a monthly income that ensures regular income post-retirement.
• An employee can withdraw 60% of their savings post-retirement and the remaining 40% will be utilized to purchase an annuity product, which offers 35% of the final salary before retirement.
• The 60% of the savings that employees withdraw is completely tax-free, which is an interesting appeal for the retirement money investment savings plan.

Know Details about the Old Pension Scheme

• Old Pension scheme pensions were given to the state and central employee and it is 50% of their last salary before retirement, dearness allowance is also included similar to the basic structure upon their retirement calculated as the furthermore dearness allowance also included as part of the basic salary to compensate for the increasing cost of living.
• Apart from pension, the employee is also entitled to gratuity payment of a maximum of 20 lakh rs.
• The retiree employee's family will be given pension benefits if in any case person could face any demise.

The Unified Pension Scheme is a mixture of both NPS and OPS. From OPS it takes the assured pension, gratuity, inflation indexation, and assured minimum pension. 

And from NPS it acquired fully funded schemes which are contributory and will give higher return post-retirement.