Government employees switching to the Unified Pension Scheme (UPS) can hope to see a significant increase in their pension, as the government’s contribution is set to increase from 14% to 18.5%.
A calculation done by the UTI Pension fund shows that the increase will be around 19% for those who join on a monthly salary of Rs 50,000 and see an annual rise of 3% with their corpus seeing a compounded annual growth of 8% – lower than what all the three fund managers have offered.
(see table below).
FUNDS FOR FUTURE
| Age of Joining (Yrs) | Service Period (Yrs) | Last Salary (₹) | NPS Corpus (₹) | UPS Corpus (₹) | NPS Pension (₹) | UPS Pension (₹) |
|---|---|---|---|---|---|---|
| 25 | 35 | 1,36,595 | 3,59,54,344 | 4,26,95,783 | 1,79,772 | 2,13,479 |
| 27 | 33 | 1,28,754 | 3,01,04,550 | 3,57,49,153 | 1,50,523 | 1,78,746 |
| 30 | 30 | 1,17,828 | 2,29,31,630 | 2,72,31,311 | 1,14,658 | 1,36,157 |
| 35 | 25 | 1,01,640 | 1,42,79,938 | 1,69,57,426 | 71,400 | 84,787 |
Details
- NPS vs UPS (Figures in ₹)
- Basic pay at 60 years for someone starting at ₹ 50,000 a month, assuming a 3% annual increase.
- NPS: Govt contribution at 14% of pay, employees at 10%.
- UPS: Govt contribution at 18.5% of pay, employees at 10%.
- Fund growth is assumed at 8% CAGR.
- Annuity return assumed at 6%.
Source: UTI Pension Fund
The corpus will probably be bigger…
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