UPS Pension Calculations: Rs 91,000 last-drawn basic average pay, 26 years of service? Know what will be your pension, family pension, lump sum withdrawal?

Central government was launched on January 1, 2004. It was a break away from the traditional Old Pension Scheme (OPS), where one would get a monthly pension without making any contribution to their retirement fund. In NPS, an employee needs to make a monthly contribution of at least 10 per cent of the basic pay and dearness allowance (DA) to their NPS account. The employer also makes a 14 per cent contribution to the employee's account. So, the total minimum contribution is 24 per cent. This amount is invested in equity mutual funds that follow the Nifty 50 index and debt options such as government securities.

The government employee with years of contribution to NPS may get a high-amount monthly pension, but the pension system doesn't offer them an assured pension. At 60 years of age, employees can withdraw 60 per cent of the total retirement corpus. From the remaining 40 per cent, they need to purchase an annuity plan. The return from the annuity plan offers them a monthly pension. So, the NPS pension depends on 2 things: total NPS contribution and its performance. 

A lot of central government employees were looking for an option where they would get an assured pension. Employees with a low salary bracket found it difficult to make a sizeable contribution to their NPS account and hence. As a result, the pension may be insufficient to beat inflation, so they were looking for an option where they may get an assured pension. UPS solved that problem.

UPS offers a minimum Rs 10,000 pension on completion of at least 10 years of service. The limit of the pension at different service completion years was also set. E.g., a person can get the maximum pension of 50 per cent of their 12-month average basic pay and dearness allowance (DA) prior to retirement. For employees between 10 and 25 years of service, the pension is proportionate to their service years.

The minimum employee contribution will be 10 per cent of their basic pay and DA, but the employer will contribute 18.5 per cent. So, the total contribution will be 28.5 per cent.

Here UPS combines the features of NPS and OPS. Out of the 28.5 per cent amount, 18.5 per cent is invested in market-linked schemes, but 10 per cent is invested in a pool from where assured income will come. 

Like OPS, UPS also has the concept of family pension, where, if the pensioner dies, their family will get 60 per cent amount of the pension.

At the time of retirement, UPS also offers a one-time payment to the retirees, where the lump sum payout will be 1/10th of monthly emoluments (basic+DA at retirement) X by completed six-month periods during service). 

Central government employees can make one switch from NPS to UPS. Once they switch to UPS, they can't go back to NPS.

Pensioners also enjoy the same facility that employees get. If they are getting a pension under NPS, they can make one switch.

Only central government employees can join UPS. It is not open to private sector employees. 

We will calculate the estimated pension, family pension, and the lump sum amount for a person with Rs 91,000 as a 12-month average basic pay prior to retirement and 26 years of pensionable service. We are taking DA at 55 per cent.

At Rs 91,000 average basic pay, for the person who is getting 55 per cent DA, the total estimated salary will be Rs 1,41,050, In such a situation, the estimated monthly pension at retirement will be Rs 70,525.

The estimated family pension will be Rs 42,315.

The estimated lump sum payout they will get will be Rs 7,33,460.