New Delhi: The Unified Pension Scheme (UPS) announced by the Centre on Saturday, August 24, 2024, is expected to cost the government Rs 6,250 crore. However, this assured pension scheme is expected to cost less to the exchequer than the Old Pension Scheme, which was discontinued in 2004. UPS has been described as an improvement over the National Pension Scheme which was rolled out in 2004 to replace OPS.
Unified Pension Scheme benefits and key features
UPS was announced last week by the government as a contributory scheme with an assured pension element.
Under this scheme, the government staffer will contribute 10 per cent of their salary towards pension while the government will contribute 18.5 per cent towards it, up from 14 per cent earlier.
The scheme lays down that staffers who have completed 25 years of uninterrupted service at the time of retirement will be entitled to an assured pension of up to 50 per cent of their last drawn basic pay. The minimum guaranteed pension amount is Rs 10,000. Retired staffers can withdraw up to 60 per cent of their pension corpus, which will proportionately reduce their pension payout. Clarity is awaited on tax treatment of assured pension received under the unified pension scheme or UPS.
Old pension scheme benefits and terms
The Old Pension Scheme (OPS) offered lifelong income to the government staffer after retirement. This was not a contributory pension scheme. Under OPS, retirement government officials received 50 per cent of their last drawn salary as a pension. They were also entitled to dearness relief indexed to inflation and subject to upward revision from time to time.
Apart from this, prior to 2004 government employees had access to the general provident fund (GPF), a contributory sum released to the staffer on retirement. The Old Pension Scheme was entirely funded by the government. The pension corpus received under OPS was completely tax-exempt.
UPS vs OPS: How are assured benefits offered in Unified Pension Scheme different from Old Pension Scheme. Read on to know more. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
