What makes Modi govt’s new Unified Pension Scheme different from NPS?

The Union Cabinet, chaired by Prime Minister Narendra Modi, launched the Unified Pension Scheme, which provides a fixed pension for all employees after retirement.

Livemint, Written By Sharmila Bhadoria
Published25 Aug 2024, 06:42 AM IST
The Centre on Saturday announced Unified Pension Scheme for all the government employees. Know how it is different from National Pension Scheme,
The Centre on Saturday announced Unified Pension Scheme for all the government employees. Know how it is different from National Pension Scheme,

Amid the growing demand for the rollback of the Old Pension Scheme, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved a new assured pension scheme providing 50% of salary for those who joined the service after January 1, 2004.

From the next financial year, National Pension Scheme subscribers who are government employees can opt for the Unified Pension Scheme (UPS) to avail themselves of the assured pension scheme. As the Centre has introduced the option to choose between UPS and NPS from the next financial year, here are the key differences between the two schemes.

Also Read | ’UPS reflects govt’s commitment to employees welfare and secure future,’ says PM

Guaranteed fixed pension amount

The people who have opted for the National Pension Scheme would be eligible for the Unified Pension Scheme (UPS) from the next financial year. The UPS provides an assured pension, which is 50% of the salary for those who joined the service after January 1, 2004.

However, NPS is a market-linked defined contribution scheme. Since the money from NPS is invested in the market, the pension amount is not fixed and is subject to fluctuation based on market conditions.

Also Read | NPS withdrawal rule to change soon: How this will benefit subscribers

Contribution from employee

The NPS requires a 10-per cent contribution from the employee's basic salary, matched by a 14 per cent contribution from the government. In the case of the new Unified Pension Scheme, the government's contribution to the UPS will increase to 18.5% against 14% currently. Whereas, the employees will continue to contribute 10% of their basic pay and DA.

Also Read | National Pension Scheme (NPS) changes financially untenable: Finance Ministry

NPS vs UPS eligibility

The UPS, announced by the Union Cabinet, will be available for all government employees, who joined the service after January 1, 2004.

“The Union Cabinet has approved Unified Pension Scheme (UPS) for government employees providing for the assured pension...50 per cent assured pension is the first pillar of the scheme,” ANI quoted Union Minister Ashwini Vaishnaw as saying on Saturday, August 24.

The National Pension Scheme is mandatory for government employees, but it is also available for the employees of Central Autonomous Bodies. It is also available to all State Government employees/employees of State Autonomous Bodies, if the respective State/UT opted for it.

Are private employees eligible for UPS or NPS?

The UPS has been launched for government employees who have opted for the NPS. Meanwhile, the old NPS is available for private employees if their employer has adopted the contribution. If not, any Indian citizen (between the ages of 18 and 70) can voluntarily opt for the NPS.

Tax benefit

Employees contributing to NPS are eligible for tax deductions up to 10% of salary (Basic + DA) under section 80 CCD(1) within the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE. They can also avail deduction up to 50,000 under section 80 CCD(1B) over and above the overall ceiling of Rs. 1.50 lakh under Sec 80 CCE. However, tax benefits under the UPS are yet to be notified.

Catch all the Business News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:25 Aug 2024, 06:42 AM IST
Business NewsNewsIndiaWhat makes Modi govt’s new Unified Pension Scheme different from NPS?

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Axis Bank share price

    1,181.30
    03:29 PM | 4 OCT 2024
    5.85 (0.5%)

    Tata Steel share price

    166.75
    03:56 PM | 4 OCT 2024
    -0.2 (-0.12%)

    Oil & Natural Gas Corporation share price

    295.20
    03:58 PM | 4 OCT 2024
    3.1 (1.06%)

    Tata Motors share price

    930.70
    03:56 PM | 4 OCT 2024
    4.7 (0.51%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Mahindra & Mahindra Financial share price

    301.65
    03:29 PM | 4 OCT 2024
    -20.5 (-6.36%)

    Kfin Technologies share price

    1,015.00
    03:29 PM | 4 OCT 2024
    -63.85 (-5.92%)

    Godrej Properties share price

    2,897.70
    03:57 PM | 4 OCT 2024
    -170.55 (-5.56%)

    Adani Energy Solutions share price

    963.45
    03:58 PM | 4 OCT 2024
    -52.75 (-5.19%)
    More from Top Losers

    VIP Industries share price

    563.85
    03:57 PM | 4 OCT 2024
    40.8 (7.8%)

    Oil India share price

    572.25
    03:59 PM | 4 OCT 2024
    33.4 (6.2%)

    JK Paper share price

    489.95
    03:43 PM | 4 OCT 2024
    27.1 (5.86%)

    Home First Finance Company India share price

    1,245.35
    03:40 PM | 4 OCT 2024
    63.15 (5.34%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      77,685.00-10.00
      Chennai
      77,691.00-10.00
      Delhi
      77,843.00-10.00
      Kolkata
      77,695.00-10.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.86/L0.00
      Chennai
      100.75/L-0.10
      Kolkata
      104.95/L0.00
      New Delhi
      94.72/L0.00

      Popular in News

        HomeMarketsPremiumInstant LoanMint Shorts