The central government has introduced the option of Unified Pension Scheme (UPS) for its employees under the National Pension System (NPS). In this scheme, employees get sure payment after retirement. This means that their pension will not depend on the performance of the stock market and date market. Here, NPS is a market linked pension scheme, in which the employee’s pension depends on the performance of the stock market and the date market. UPS assures a minimum of Rs 10,000 pension every month.
UPS will be applicable from 1 April 2025. If the employees coming under NPS select UPS once, then they will not have the option to use NPS again. There is a formula to calculate pension in UPS. With this formula, any person can calculate his pension.
50% of Payment = X (yoga of 12 months basic salary/12)
This formula can be used only when the service period of the employee is left 25 years or more. If the service period is less than 25 years, the payment will be in the same proportion. If the employee takes voluntary retirement after 25 years of service, the payment will start from the original date of retirement.
This can be understood with the help of an example. There can be three types of circumstances with an employee. In the first situation, assume that the serving of the employee is 25 years or more. In this situation, suppose the average basic salary of the employee at the time of retirement is Rs 12,00,000. According to Formula, this amount will have to be divided from 12. This will bring the average basic salary of 12 months to Rs 1,00,000. It has to be multiplied by 50 percent. In this way the employee will get a pension of Rs 50,000.
In the second situation, the serving of the employee is less than 25 years. Suppose the employee works for 20 years. Then he retires. So the proportional factor will be 20/25 = 0.8. In such a situation, the payment will be calculated as follows. 50% x 1,00,000 x 0.8 = 40,000
The third situation is the minimum guaranteed payment. Suppose the basic salary of an employee at the time of retirement is Rs 15,000, then his payment will be Rs 7,500, which will be less than the minimum amount. In such a situation, his final payment will be Rs 10,000.
