The Union Cabinet led by Prime Minister Narendra Modi announced a Unified Pension Scheme (UPS) on Saturday (Aug 24), which aims to increase the retirement benefits for 23 lakh central government employees.

The UPS has certain elements of both the Old Pension Scheme (OPS) and the current National Pension Scheme (NPS) that will benefit the employees. The scheme will be effective from April 1, 2025, and will include assured pensions, family pensions, and minimum pensions to provide financial security for government workers after retirement.

Central government employees will be given the option to choose between UPS and NPS. Employees who are already NPS subscribers will be given an option to switch to UPS.

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<h2>Key features of the Unified Pension Scheme</h2>

Assured pension

Employees who subscribe to the UPS with at least 25 years of service will get an assured pension of 50% of their average basic pay over the last 12 months before retirement. Other employees having a minimum of 10 years of service will be eligible for a pension proportionate to their tenure.

Assured family pension

UPS provides an assured family pension after their demise, according to which the employee's spouse will be given 60% of the pension drawn before their death.

Assured minimum pension

Employees who retire before completing 25 years of their service will be assured a minimum pension of&nbsp; Rs 10,000 monthly after retirement with a minimum of 10 years of service.

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Inflation indexation

For the subscribers of UPS, the assured pension, family pension and minimum pension will be indexed to inflation.

Dearness Relief

Both serving and retired employees under the UPS will get Dearness Relief based on the All India Consumer Price Index for Industrial Workers (AICPI-IW).&nbsp;

Lump sum payment on superannuation

Apart from the assured pension, subscribers of UPS will also receive a lump sum payment on superannuation along with gratuity. This payment will amount to 1/10th of the employee's monthly emoluments, which includes pay and Dearness Allowance, as of the date of retirement for every completed six months of service.&nbsp;

(With inputs from agencies)

The Union Cabinet led by Prime Minister Narendra Modi announced a Unified Pension Scheme (UPS) on Saturday (Aug 24), which aims to increase the retirement benefits for 23 lakh central government employees.

The Union Cabinet led by Prime Minister Narendra Modi announced a Unified Pension Scheme (UPS) on Saturday (Aug 24), which aims to increase the retirement benefits for 23 lakh central government employees. The UPS has certain elements of both the Old Pension Scheme (OPS) and the current National Pension Scheme (NPS) that will benefit the employees. The scheme will be effective from April 1, 2025, and will include assured pensions, family pensions, and minimum pensions to provide financial security for government workers after retirement. Central government employees will be given the option to choose between UPS and NPS. Employees who are already NPS subscribers will be given an option to switch to UPS. Also read | India: BJP urges top poll body to change Haryana election dates, Congress reacts Key features of the Unified Pension Scheme Assured pension Employees who subscribe to the UPS with at least 25 years of service will get an assured pension of 50% of their average basic pay over the last 12 months before retirement. Other employees having a minimum of 10 years of service will be eligible for a pension proportionate to their tenure. Assured family pension UPS provides an assured family pension after their demise, according to which the employee's spouse will be given 60% of the pension drawn before their death. Assured minimum pension Employees who retire before completing 25 years of their service will be assured a minimum pension of Rs 10,000 monthly after retirement with a minimum of 10 years of service. Also read | Home Minister Amit Shah chairs crucial meeting to strengthen anti-Naxal strategy; officials of 7 states attend Inflation indexation For the subscribers of UPS, the assured pension, family pension and minimum pension will be indexed to inflation. Dearness Relief Both serving and retired employees under the UPS will get Dearness Relief based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). Lump sum payment on superannuation Apart from the assured pension, subscribers of UPS will also receive a lump sum payment on superannuation along with gratuity. This payment will amount to 1/10th of the employee's monthly emoluments, which includes pay and Dearness Allowance, as of the date of retirement for every completed six months of service. (With inputs from agencies)

What is Unified Pension Scheme? Here's what you should know

In the Indian government's Budget 2024, the National Pension Scheme (NPS) is expected to be an important investment instrument in which significant changes are likely to be announced.&nbsp;

The taxpayers have been demanding some changes in the NPS which can make this investment more beneficial for them and give them more returns in the longer period.

The NPS holds importance for the taxpayers as investing in this instrument gives them additional income tax deductions under&nbsp;Sec 80CCD(1B).&nbsp;&nbsp;

The taxpayers are now demanding that NPS should be aligned with other government savings instruments like EPF, which work more or less like a retirement scheme.

There have also been demands to increase the tax deduction limit under Sec 80CCD(1B) from Rs 50,000 ($598.68) to Rs 1,00,000 ($1197.35) and raise the tax-free withdrawal limit from 60 per cent to 80 per cent upon maturity.

Amid these demands, media reports have suggested that all central government employees who are registered under NPS are likely to get 50 per cent of their last drawn pay as pension.

Also Read:&nbsp;<a href="https://www.wionews.com/business-economy/money-wise-planning-to-invest-in-an-ipo-here-are-five-things-you-must-keep-in-mind-738265">Money-wise: Planning to invest in an IPO? Here are five things you must keep in mind</a>

So, is this investment instrument under section 80(C) of income tax deductions a lucrative option?

<h2>Understand NPS and its impact on our personal pockets</h2>

The National Pension Scheme can be best defined as a retirement plan or long-term saving plan with comparatively less but secured return on investment.&nbsp;

This scheme is open to employees who are in private, public and even unorganised sectors. However, it does not have an enrolment policy for people in the armed forces.

In this scheme, people are expected to invest some money in the pension account at regular intervals during their employment years.&nbsp;

Throughout this period, the account holder is free to partially withdraw 25 per cent of his contributions three times throughout the tenure of the account, after the account has completed three years. However, there needs to be a gap of five years between the partial withdrawals, unless it is being made to meet medical expenses.

Upon retirement, the account holder can withdraw a certain percentage of the corpus and the rest gets converted as a monthly pension.

Watch:&nbsp;Tesla stock surges 38%

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This scheme has so far delivered nine&nbsp;per cent to 12 per cent annualised returns, which can be called a decent interest rate. However, it may vary depending on the pension fund chosen.

So, NPS is a good investment plan for those who wish to create a corpus for their retirement and also avail tax benefits on the same. A tax deduction can be claimed on investments made in NPS under Section 80CCD(1), Section 80CCD(1B),&nbsp;and Section 80CCD(2).&nbsp;

Under section 80CCD(1), a person can claim a tax deduction of Rs 1,50,000 ($1796.03) every year and an additional deduction of up to Rs 50,000 ($598.68) under section 80CCD(1B). It should be noted that Section 80CCD(1), Section 80CCD(1B) and Section 80CCD(2) are not included in the popular Section 80C.

However, this is not a scheme for those who wish to multiply wealth and make bigger gains on the investments in a shorter duration of time. &nbsp;

In the Indian government's Budget 2024, the National Pension Scheme (NPS) is expected to be an important investment instrument in which significant changes are likely to be announced.

In the Indian government's Budget 2024, the National Pension Scheme (NPS) is expected to be an important investment instrument in which significant changes are likely to be announced. The taxpayers have been demanding some changes in the NPS which can make this investment more beneficial for them and give them more returns in the longer period. The NPS holds importance for the taxpayers as investing in this instrument gives them additional income tax deductions under Sec 80CCD(1B). The taxpayers are now demanding that NPS should be aligned with other government savings instruments like EPF, which work more or less like a retirement scheme. There have also been demands to increase the tax deduction limit under Sec 80CCD(1B) from Rs 50,000 ($598.68) to Rs 1,00,000 ($1197.35) and raise the tax-free withdrawal limit from 60 per cent to 80 per cent upon maturity. Amid these demands, media reports have suggested that all central government employees who are registered under NPS are likely to get 50 per cent of their last drawn pay as pension. Also Read: Money-wise: Planning to invest in an IPO? Here are five things you must keep in mind So, is this investment instrument under section 80(C) of income tax deductions a lucrative option? Understand NPS and its impact on our personal pockets The National Pension Scheme can be best defined as a retirement plan or long-term saving plan with comparatively less but secured return on investment. This scheme is open to employees who are in private, public and even unorganised sectors. However, it does not have an enrolment policy for people in the armed forces. In this scheme, people are expected to invest some money in the pension account at regular intervals during their employment years. Throughout this period, the account holder is free to partially withdraw 25 per cent of his contributions three times throughout the tenure of the account, after the account has completed three years. However, there needs to be a gap of five years between the partial withdrawals, unless it is being made to meet medical expenses. Upon retirement, the account holder can withdraw a certain percentage of the corpus and the rest gets converted as a monthly pension. Watch: Tesla stock surges 38% This scheme has so far delivered nine per cent to 12 per cent annualised returns, which can be called a decent interest rate. However, it may vary depending on the pension fund chosen. So, NPS is a good investment plan for those who wish to create a corpus for their retirement and also avail tax benefits on the same. A tax deduction can be claimed on investments made in NPS under Section 80CCD(1), Section 80CCD(1B), and Section 80CCD(2). Under section 80CCD(1), a person can claim a tax deduction of Rs 1,50,000 ($1796.03) every year and an additional deduction of up to Rs 50,000 ($598.68) under section 80CCD(1B). It should be noted that Section 80CCD(1), Section 80CCD(1B) and Section 80CCD(2) are not included in the popular Section 80C. However, this is not a scheme for those who wish to multiply wealth and make bigger gains on the investments in a shorter duration of time.

Money-Wise: Big changes on NPS in India Budget. How to make best investment in this pension scheme?

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What is Unified Pension Scheme? Here's what you should know

Money-Wise: Big changes on NPS in India Budget. How to make best investment in this pension scheme?