TENSION OF PENSION : OPS Vs NPS Vs UPS

Dr. Manmohan Singh
Deputy Chairman of the Planning Commission (1985-1987)
• FLAB IN THE GOVERNMENT EMPLOYMENT ( 1986 FORTH PAY COMMISSION)
• Economic Liberalization (1991)
• Pioneering Reforms in Banking and Finance
• Establishment of SEBI
• NPS 2004 Jan 1
• 6th pay commission 2006 Jan 1
• Rahul Gandhi tore a copy of an ordinance (a temporary law) in public on September 27, 2013,

The New Pension Scheme (NPS), now known as the National Pension System, was introduced in India on January 1, 2004.

The primary reason for introducing the NPS was to shift from the defined benefit pension system to a defined contribution pension system, aimed at reducing the financial burden on the government due to pension liabilities.

The NPS was later extended to all Indian citizens on a voluntary basis from May 1, 2009.

The scheme allows individuals to save for retirement by contributing to a pension account throughout their working life, with the accumulated savings being used to provide a pension after retirement.

NPS:1.
Account TypesTier I Account:Primary Account: This is the main retirement account with restrictions on withdrawals. Mandatory Contributions: Minimum contributions are required periodically (e.g., ₹1,000 per year).Withdrawals: Limited to specific circumstances such as retirement, critical illness, or higher education of children. Partial withdrawals are allowed under certain conditions (10% PERCENT BY THE INDIVIDUAL AND 14% BY THE Government)

Tier II Account:
Voluntary Savings Account: Offers greater flexibility with no restrictions on withdrawals.
Eligibility Open to All: Indian citizens aged 18 to 65 years

The NPS is one of the lowest-cost pension schemes available, with minimal fund management charges, ensuring more of your money is invested rather than being consumed by fees.
Tax Benefits: Offers significant tax benefits under Section 80C and Section 80CCD(1B), allowing for deductions of up to ₹2 lakh,
The NPS is portable across jobs and locations, meaning you can continue contributing to the same account even if you switch jobs or move to a different city.
Regulated by PFRDA


UPS
ASSURED PENSION -

It will be 50% of the average basic pay drawn during the last 12 months before superannuation

A minimum qualifying service of 25 years
Gets reduced proportionately for lesser qualifying service

A minimum of 10 years qualifying service required

ASSURED FAMILY PENSION -
It will be 60% of the pension drawn by the deceased pensioner

❖ ASSURED MINIMUM PENSION -
➢ It will be Rs 10,000/- on completion of a minimum of 10 years qualifying service

INFLATION INDEXATION -
A Dearness Relief shall be payable on the assured pension, assured family pension and assured minimum pension
The DR will be based on AICPI-IW i.e. All India Consumer Price Index - Industrial Worker

LUMP SUM PAYMENT -
It will be 1/10th of the last emolument drawn (Pay + DA) for every six monthly period of service
This will be in addition to the Gratuity
This will not reduce the assured pension

Applicable to those under NPS on one time option basis
Applicable to those already retired under NPS
Arrears with interest equal to @interest on PPF
Employees contribution will remain 10%
Government’s contribution increased from 14% to 18.5%

It will be effective from 01st of April 2025
It will benefit around 23 Lakh Central Government Employees
The scheme is adoptable by the State Governments also
If adopted by the states it will benefit around 90 lakh government employees
1990-91 about 3200 crore
Abb h kareeb 2 lakh crore ‘’’’’’’’’’’’’’’’’’’’