Unified Pension Scheme: The central government has given a great gift to the central employees. Now the tax benefits of National Payment Scheme (NPS) will also be available in Unified Pension Scheme (UPS). The Finance Ministry has announced this. Let us know what is UPS and how it is different from NPS.
Unified Pension Scheme: With the aim of promoting the Unified Pension Scheme (UPS), the central government has decided to give tax benefits like NPS in it. The Finance Ministry has announced this. The ministry has said in a statement that the inclusion of UPS under the tax structure is another step of the government towards strengthening retirement security for central government employees through transparent, flexible and tax-efficient options. Earlier, the government had extended the deadline for central employees to choose the UPS option by 3 months from 30 June to 30 September 2025.
The Finance Ministry said that to further improve UPS, the government has decided that the tax benefits available under NPS will also apply to UPS with some necessary changes. This is an option under NPS. This will ensure that there is equality in both the schemes and the employees who choose UPS. They can also get good tax exemption and incentives.
Know what is UPS
The Unified Pension Scheme (UPS) has been implemented from 1 April 2025. This scheme guarantees a fixed pension with certain conditions. This scheme has been brought under the framework of NPS. Its purpose is to provide a fixed and guaranteed pension to government employees. In this scheme, after retirement, employees will get benefits like fixed pension, lump sum amount and gratuity. This scheme is especially for those who want financial security after the job.
Overall, the central government employees have got a new and better pension option. This is very special for them. Employees who are already in the National Pension System (NPS) can now join UPS if they want. The biggest feature of this scheme is that after retirement, the employees will get an assured monthly pension, which will be decided on their average salary. This pension scheme is for central government employees in India. Under UPS, the government contributes 18.5 percent of the employee’s basic salary and dearness allowance. Whereas the employee contributes 10 percent of his basic salary and dearness allowance.
Who can choose UPS?
UPS is the default option for new recruits from April 1, 2025. That is, there will be only Unified Pension Scheme for newly recruited central government employees. Existing government employees who are currently covered under NPS have been given the option to switch to UPS. To make the implementation of this new pension plan easier, the Pension Fund Regulatory and Development Authority issued the necessary rules and regulations in March 2025.
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