Some of my friends from Revenue Services have prepared this calculator to compare the benefits of NPS (National Pension System) and UPS (Unified Pension Scheme). Hope it will be beneficial for you to chose the option between the two.
The National Pension System (NPS) is a retirement savings scheme initiated by the Government of India to provide a stable income post-retirement for all subscribers. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), NPS offers a Permanent Retirement Account Number (PRAN) to each account holder. This voluntary and flexible scheme allows investments across various asset classes, including equity, corporate bonds, government securities, and alternate assets. NPS is economical and portable, and it provides tax benefits under sections 80CCD(1) and 80CCD(1B) of the Income Tax Act. Additionally, it facilitates the transfer of superannuation funds without tax implications. Subscribers can choose between Active Choice and Auto Choice investment options, with varying risk profiles and asset allocations. The scheme is accessible online for Indian citizens aged 18-70 and offers corporate benefits with tax exemptions for employer contributions. HDFC Bank assists with NPS services, including corporate registration and employee enrollment.
The Central Government introduced the Unified Pension Scheme (UPS) on 24 August 2024, with implementation scheduled for 1 April 2025, aimed at benefiting 23 lakh Central Government employees. The UPS offers a stable pension system ensuring financial security post-retirement. Employees under the current National Pension System (NPS) can opt for UPS, but the decision is final. The scheme provides a pension of 50% of the average basic pay for those with 25 years of service, or a minimum of ₹10,000 per month for those with at least 10 years of service. Contributions include 10% from employees and 18.5% from employers. Maharashtra is the first state to adopt the UPS, and if all states follow, it could impact over 90 lakh employees. Key benefits include inflation-adjusted pensions, a guaranteed minimum pension, and a lump sum payment upon retirement. UPS differs from NPS by offering a fixed pension and family pension, unlike NPS, which relies on market-linked returns and lacks guaranteed benefits.
Disclaimer: This calculator is designed to compare projected pension and corpus between NPS and UPS on the basis of information available as on date. This is only a mathematical tool to ascertain the future value of pension and corpus under NPS and UPS.
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