UPS vs NPS Rs 16 cr Corpus Calculations: Age 26, basic pay Rs 40,000? Which scheme can give you Rs 16 cr retirement fund, Rs 2.50 lakh+ pension at 60
UPS vs NPS Pension Comparisons: If you are a 26-year-old with a Rs 40,000 monthly basic pay and dearness allowance (DA) with pensionable service of 34 years, where you may get Rs 16 crore corpus and a higher monthly pension – NPS or UPS? See comparisons to know-
UPS vs NPS Pension Comparisons: Retirement is an important aspect for every government employee who seeks a comfortable life once their service ends. They have National Pension System (NPS) and Unified Pension System (UPS) as retirement schemes to create their retirement corpus and get a monthly pension. They may opt for either of them, and each scheme provides them to generate a sizeable retirement corpus and get a significant monthly pension. But in which of the schemes can they generate a Rs 16 crore retirement corpus and get a higher monthly pension? What should be their monthly and overall contribution to achieve that target? See our projections to know
Photos: Unspalsh/Pixabay/Pexels
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
NPS for central government employees
NPS is the default retirement scheme for central government employees who joined service from January 1, 2004. Employees who joined their service before that have Old Pension Scheme (OPS) as a default option.
NPS for central government employees
NPS broke away from the traditional system of retirement benefits where the pension was fixed without the employee making any contribution for it. In NPS, the lump sum amount at retirement and pension depend on the employee's and employer's contributions to the employee's NPS account.
UPS for central government employees
Central government employees can now opt for UPS also. NPS account holders can also shift to UPS. Pensioners who have been getting their under NPS can also shift to UPS. It is different from NPS, as UPS offers an assured pension after 10 years of completed service.
UPS for central government employees
The maximum pension can be 50 per cent of the employee's last-drawn 12-month average salary immediately prior to retirement. Along with this pension, pensioners will also get dearness relief (DR) as per prevailing rates.
NPS: Employee and employer contribution
The employee contribution is a minimum of 10 per cent of their basic salary.
On the other hand, the employer contribution is 14 per cent of the basic pay.
The amount is invested in equity and fixed interest assets in a 50:50 proportion.
UPS: Employee and employer contribution
In UPS, the employee contribution is the same as in NPS.
But the employer contribution is 18.5 per cent (10 per cent for USP conrpus+10 per cent for assured income pooled corpus)
NPS: Benefits at retirement
At 60 years of age, a central government employee can withdraw up to 60 per cent of their retirement corpus. From the remaining 40 per cent corpus, they need to purchase an equity plan to get a monthly pension.
NPS: Benefits at retirement
If they want, they can buy an annuity from 100 per cent of their corpus. They can also defer their annuity purchase by 3 years and lump sum withdrawal till 75 years of age.
UPS: Benefits at retirement
The account holder gets an assured monthly pension and lump sum amount at the retirement age of 60. Apart from that, they will also get one more lump sum withdrawal, which can increase their overall benefits comprehensively. UPS also has the provision of a family pension, which will be 60 per cent of the amount given to the deceased.
Calculation conditions for story
Our conditions for the UPS vs NPS retirement benefit calculations are as follows-
Basic pay and DA- Rs 40,000
Current age- 26 years
Pensionable service- 34 years
Retirement age- 60
Annual basic pay growth- 5 per cent
DA growth/year- 5 per cent
Return from investment- 9.5 per cent
Final withdrawal percentage- 60 per cent
Annuity purchase percentage- 40 per cent
Annuity return rate- 6.5 per cent
Life expectancy of self- 80 years
Life expectancy of surviving spouse- 80 years
UPS payout
Monthly payout after superannuation- Rs 2,13,647 + DR
Lump sum payout at superannuation- Rs 89,24,775
Final withdrawal payout at superannuation- Rs 6,47,56,316
Total monthly payouts to subscribers in retirement phase- Rs 8,65,27,116
Aggregate expected benefits to be received by the subscriber- Rs 16,02,08,207
NPS payout
Monthly payout after superannuation- Rs 2,80,611
Lump sum payout at superannuation- Not applicable
Final withdrawal payout at superannuation- Rs 47,77,07,579
Total monthly payouts to subscribers in retirement phase- Rs 6,73,46,569
Aggregate expected benefits to be received by the subscriber- Rs 14,50,54,148