Nps vs ups: Economic security is most important after retirement and for this the plan for proper investment is necessary. If your plan is to get a pension of Rs 1 lakh every month after retirement, then for this you will have to invest in the right scheme. National Pension System (NPS) and Universal Pension Scheme (UPS) are two major options, through which you can achieve this target. Let us know how much will be made in which scheme and which option will be better.
From April 1, 2025, all central government employees will get an option to choose from two pension schemes. National Pension System (NPS) and Integrated Pension Scheme (UPS). The NPS, launched in January 2004, replaced the old pension scheme (OPS) and covers all departments under the central government. On the other hand, UPS is a recent new pension scheme announced by the government, which will be applicable from April 2025.
NPS is a retirement scheme run by the Government of India, in which a person has to invest regularly. In this, investors get both lump sum and pension after the age of 60 years. In this, the return depends on the status of the market. At the same time, UPS is a private pension scheme, in which a person can choose an investment plan as per his need. It has plans of different companies and the return on investment may vary. Under UPS, the government will contribute 18.5% to the basic salary and dearness allowance (DA) sum, while the employee's contribution will be 10%, which is similar to NPS.
There is no definite pension guarantee in NPS, while UPS gets pension based on the percentage of average basic salary. Under NPS, there is an option to invest in equity, loan and other market-linked funds, while UPS mainly invests in government bonds and safe schemes. The government's contribution to UPS is more than NPS.
Investment in NPS is connected to the market, which makes it more risky, while UPS is a low -risk scheme, as it gets fixed pension. Now the question is, how much will you have to invest in both schemes to get a monthly pension of 1 lakh rupees? Let us explain it in detail to you.
Suppose someone joins a government job on 1 April 2025 at the age of 25 and retires at the age of 60, he has done a job for 35 years. If the average basic salary of the last 12 months before retirement is Rs 2 lakh per month, then under UPS, a guaranteed pension will be given at the rate of 50%, ie Rs 1 lakh per month. Apart from this, there is a provision to increase pension according to inflation every year in UPS. If you consider an increase of 4.5 per cent annually, then at the age of 61, the pension will be Rs 1,04,500.
If a person starts working at the age of 25 and retires at the age of 60, then he will need to invest Rs 16,800 (10% employee contribution and 14% government contribution) every month.
The age of joining NPS: 25 years. The contribution of every month (employee + government) is Rs 16,800. The estimated return is 9 percent on investment. The total investment is Rs 70.6 lakh and the total return is 4.27 crore rupees. In this, the closing amount is Rs 4.98 crore. 40% fund allocated for pension is Rs 1.99 crore and 40% fund for pension is Rs 1.99 crore. The estimated return investment is 6 percent. The lump sum withdrawal is 60% 2.99 crore rupees, so every month your pension will be 1 lakh rupees.
