The salient features of the UPS are:
1. Assured pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. This pay is to be proportionate for lesser service period upto a minimum of 10 years of service.
2. Assured family pension: @60% of pension of the employee immediately before her/his demise.
3. Assured minimum pension: @10,000 per month on superannuation after minimum 10 years of service.
4. Inflation indexation: on assured pension, on assured family pension and assured minimum pension. This means that the pension will keep on increasing as per inflation and it (Dearness Relief) will be based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of service employees.
5. Lump sum payment at superannuation in addition to gratuity – 1/10th of monthly emoluments (pay + DA) as on the date of superannuation for every completed six months of service this payment will not reduce the quantum of assured pension.
The new scheme (UPS) will be applicable from April 1, 2025. It will affect 23 lakh Central Govt. Employees, and States may also join it benefiting around 60 lakh state Govt. employees. Employees can choose either UPS or NPS.
The main difference in UPS is, it offers assured pension – which is 50 per cent of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. While in case of NPS, the contribution by employer/govt. (14%) and employee (10%) is invested in market (equity and bonds) and pension is created as per the value of the fund at retirement. In case of UPS, employer/govt. (18.5%) and employee (10%) will have to contribute but they can get an assured pension. In Old Pension Scheme (OPS), there was no contribution from employer/govt. and employee.