Unified Pension Scheme: How Will It Impact Your Retirement? Here's A Breakdown Of Your Basic Salary & What You’ll Receive Upon Retirement

The recent Union Government announcement of the Unified Pension Scheme (UPS) on August 24, 2024, has sparked considerable curiosity among government employees about how it will be going to impact their pensions.

The scheme will be effective from April 1, 2024, but after the announcement of this scheme, many employees might be wondering what they would receive if they retired today or how it will affect their retirement.

Let's take a look at the possible pension amount under the new scheme for different salary ranges like Rs 90,000 and Rs 1 lakh and how the scheme is set to work.

The Central Government introduced the UPS recently to provide government employees with a guaranteed pension based on their years of service and contributions.

But this scheme also comes with certain criteria such as eligibility, pension calculation, and so on.

In the case of eligibility, this scheme will be available to employees completing at least 25 years of service to qualify for a full pension or those with at least 10 years of service, a minimum pension of Rs 10,000 per month is assured.

The pension amount will be 50 per cent of the average basic salary over the last 12 months for those who have served 25 years or more.

Furthermore, in case of the employee's death, the family is entitled to 60 per cent of the pension.

The government will contribute 18.5 per cent of the basic salary plus Dearness Relief (DR), while employees will contribute 10 per cent.

Calculating Your Pension: Examples with Different Salary Bands

To help you gauge what your pension might look like under UPS, let’s break down the calculations for basic salaries of Rs 90,000 and Rs 1,00,000.

Basic Salary of Rs 90,000

Pension Amount: With a basic salary of Rs 90,000, the pension under UPS would be Rs 45,000 per month, plus DR.

Family Pension: Your family would receive Rs 27,000 per month, plus DR.

Basic Salary of Rs 1,00,000

Pension Amount: For those earning a basic salary of Rs 1,00,000, the pension amount would be Rs 50,000 per month, plus DR.

Family Pension: The family pension in this case would be Rs 30,000 per month, plus DR.

Upon retirement, employees will receive a lump sum along with gratuity, calculated at 1/10th of the monthly emoluments (pay + DA) for every six months of completed service.