Now that the gazette notification for the Unified Pension Scheme is out (search for CG-DL-E-25012025-260482 at https://egazette.gov.in/), or download a copy here now could also be an excellent time to revisit the NPS vs UPS choice for presidency staff, particularly provided that they have to train their alternative, and it’s a one-time non-modifiable alternative!
Concerning the writer: Dr. Kumar Appaiah is an Affiliate Professor within the Division of Electrical Engineering on the Indian Institute of Know-how Bombay.
The arithmetic of the comparability don’t change. You may see this article and the calculator offered therein to see whether or not the NPS corpus can substitute for the Unified Pension Scheme. Nevertheless, the gazette notification does point out some fascinating guidelines that will have an effect on your choice to decide on one over the opposite.
In Reddit model, the tl;dr is straightforward: in the event you don’t need to do an excessive amount of of economic projections and maths, going with the Unified Pension Scheme is the protected possibility. That mentioned, I hope that you just learn under on some circumstances the place staying with NPS could also be higher to make a extra knowledgeable choice.
Corpus flexibility
As has been covered already, selecting to go the UPS method means bidding goodbye to your collected NPS corpus. Which means that there isn’t any strategy to get again the complete NPS corpus that you’ve collected, since it’s transferred over to the federal government to make your pension. Solely within the case {that a} surplus collected within the UPS, the additional is returned to you. For instance, when you’ve got spent 10 years in authorities service and have collected an excellent NPS corpus, and you’ve got 25 years of service left, and resolve to maneuver to the UPS, then the surplus quantity collected over and above that quantity wanted to maintain your assured pension is returned to you as a lumpsum throughout retirement (more likely to occur since 25 years of service is sufficient for the assured pension). Nevertheless, that is a lot much less versatile than the 60% lumpsum that you may obtain within the case of the NPS, which you’ll use on your retirement, bequeath it to your nominees and so forth.
Make my very own pension
The UPS is basically a rising annuity that the federal government is assuring you. They’re going to make investments the corpus in a mixture of shares and bonds to maintain the pension and provide the assured cost. Nevertheless, it’s a one-size suits all resolution, with 50% assured payout being the start line very like the outdated pension scheme. Your wants could also be totally different, and chances are you’ll want kind of monthly, and managing the corpus your self could also be a lot better. You should utilize one thing like a bucket strategy to make your individual pension. This doesn’t want a lot monetary engineering, since moderately simple products exist that can be utilized to construct your individual retirement plan the best way you need. In fact, you lose the federal government assure, however chances are you’ll not even want it within the first place and will find yourself customizing it a lot better on your personal wants.
No authorities dependence after retirement
For those who use the NPS strategy, your cash is your individual after retirement. The annuity, after all, entails an insurance coverage firm and never the federal government, and thus, you might have severed all monetary ties with the authorities associated to your service. Within the UPS case, nonetheless, you might be nonetheless depending on the federal government on your pension. Within the unlikely however unlucky case that the pension calculations fail, this might result in a disaster the place pensions could also be affected (see for instance the occasions in Greece associated to pensions here and here).
To conclude, whereas the UPS assure is engaging for many, there are nonetheless good causes to think about staying with the NPS.
You should utilize this calculator to make an knowledgeable judgement: Revised UPS vs NPS Calculator after Jan 2025 Gazette Notification
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