The National Pension System (NPS) Trust, on May 20, 2025, launched the Unified Pension Scheme (UPS) Calculator, aimed at helping Central Government employees compare pension benefits under both the NPS and the newly introduced UPS.
On Tuesday, the Department of Financial Services (DFS) announced that government employees are able to determine their pension estimates through the use of the UPS calculator.
“NPS Trust has launched the Unified Pension Scheme (UPS) calculator,” DFS, under the finance ministry, said in a post on X.
The Unified Pension Scheme (UPS), officially notified by the Government of India, is now available as an option under the NPS framework. Introduced from April 1, 2025, UPS offers a hybrid model that combines defined contribution and defined benefit components, promising government employees an assured monthly pension, lump sum payout, and gratuity upon retirement.
Managed by the Pension Fund Regulatory and Development Authority (PFRDA), the UPS has been designed for employees who seek more financial certainty post-retirement. Existing NPS subscribers in the Central Government can opt into the UPS before June 30, 2025, while new government recruits can choose the scheme within 30 days of joining.
To assist employees in making informed decisions, the UPS Calculator provides a side-by-side estimate of pension payouts under both schemes.
The tool is designed to:
Compare projected pension benefits under NPS vs UPS
Simplify retirement planning through clear estimates
Help users choose the pension plan aligned with their financial goals.
How will UPS work?
UPS will depend on the consistent and prompt accumulation and investment of relevant contributions (from both employees and employers) to guarantee payouts to employees.
Subscribers of UPS will contribute 10% of their basic pay and dearness allowance on a monthly basis. The Central Government will match this contribution for each individual PRAN of UPS subscribers.
Furthermore, the minister mentioned that the Central Government will make an extra contribution of approximately 8.5% of basic pay plus dearness allowance for all employees who choose UPS, contributing to the overall pool corpus.
This additional contribution from the government will support assured payouts within UPS and ensure the scheme’s long-term financial sustainability.
Investment options for UPS
Central Government subscribers under UPS have the flexibility to select from various pension funds registered with PFRDA. They can choose to invest their funds in the following options:
100% investments in Government securities
Conservative Life Cycle fund with a maximum equity exposure limited to 25%
Moderate Life Cycle fund with a maximum equity exposure limited to 50%
Default scheme
It is important to note that under UPS, employees can only exercise investment choices for their individual corpus.
NPS vs UPS
1. NPS: Employee contributes 10% of basic pay + DA; government contributes 14% to the NPS Tier 1 account.
UPS: Employee contribution remains 10%, but government contributes 18.5%. Of this, only 10% goes to the NPS account; the remaining 8.5% is directed to a common pool and is not returned at maturity.
Impact: While the total government contribution is higher under UPS, a significant part (8.5%) becomes a pooled fund, not part of the individual’s final corpus.
2. Investment Flexibility
NPS: Offers full control over asset allocation—choose between equity, debt, or lifecycle funds.
UPS: Has a default asset mix (currently 85% debt, 15% equity); employees can choose to deviate but must match the default corpus to get the guaranteed pension.
Impact: UPS limits flexibility; deviating from the default allocation risks falling short of the guaranteed benefit.
3. Pension Guarantee
NPS: Final pension depends entirely on market performance and annuity rates at retirement.
UPS: Offers an assured monthly pension, provided the default corpus is met; excess returns, if any, are passed on to the employee.
Impact: UPS is better suited for those seeking predictable post-retirement income, while NPS suits market-savvy investors comfortable with risk.