UPS Pension Calculations: Average basic pay at retirement Rs 90,000; pensionable service 26 years; know your assured monthly pension and lump sum amount

UPS Pension Calculations: Apart from New Pension System (NPS), central government employees will have one more option to choose from April 1, 2025-  Unified Pension Scheme (UPS).

The new scheme was introduced in October 2024 and notified in January this year.

Central government employees who follow NPS can also switch to UPS.

Unified Pension Scheme is a mix of Old Pension Scheme (OPS) and NPS, where the employee will get an assured pension.

At the same time, they may get an extra amount based on the performance of their market-linked investments.

The most striking feature of UPS is a minimum assured pension on a minimum service completion of 10 years.

Other than that, the employee will also get a lump sum amount at retirement.

Know more about the scheme and what the pension will be for an employee whose last 12-month basic average pay is Rs 90,000, and pensionable service was 26 years. 

Pension slabs in UPS

The starting slab is Rs 10,000 on the completion of at least 10 years of service.

The maximum is 50 per cent of the 12-month average of basic pay and dearness allowance (DA) prior to retirement.

However, to get that, one must have completed at least 25 years of service.

Employees whose pensionable service years are between 10 and 25 will get a proportionate pension on the basis of service years.

Can private sector employees opt for UPS?

The scheme is open to central government employees so far. Most likely, it will be open to state government employees. However, there is no provision for private sector employees to open a UPS pension account.

Can NPS account holders switch to UPS?

Central government employees following NPS can switch to UPS, like the employees of Employees' Provident Fund Organisation (EPFO) have switched to UPS from NPS.

However, only one switch is allowed. Once they opt for UPS, they can't switch back to NPS.

Can existing NPS pension holders switch to UPS?

They can switch to NPS, but for them also, only one switch is allowed.

Employee and employer contribution

Central government employees can invest a maximum of 10 per cent of their basic pay and DA.

The government's contribution will be 18.5 per cent. In NPS, it is 14 per cent.  

The employee's and the employer's 10 per cent contribution each will go to market-linked investment.

The government's 8.5 per cent contribution will go into a pool, which will be used to provide an assured pension to the employee.

What if market-linked investments underperform?

If that happens and the employee's corpus is unable to give them the minimum assured pension, the government will pitch in from the pooled investments to bridge the gap of the assured pension.

How much lump sum will employee get?

The formula to calculate the UPS lumpsum amount is (1/10th of monthly emoluments (basic+DA at retirement) X completed six-month periods during service)

Pension for employee with Rs 90,000 average basic pay, 26 years of service 

We are calculating the pension amount at the current DA rate of 53 per cent.
Total pension= (50 per cent of basic+DA on 50 per cent of basic): Rs 68,850
Family pension= 60% of the full pension= Rs 41,310.00

Lump sum amount for employee with Rs 90,000 average basic pay, 26 years of service 

The lump sum amount that they will get at retirement will be Rs 7,16,040.