• Source:JND
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Unified Pension Scheme: The much-awaited Unified Pension Scheme (UPS), which provides guaranteed pensions to central employees, will come into force on April 1. The scheme is open to both recruits and existing employees, and applications can be submitted online or in person. One of its key features is that UPS requires applicants to choose their registered pension fund and investment strategy during the application process. Like the National Pension Scheme (NPS), it ensures proper fund management and maximum returns.

Structure of Contributions

1. Funding for personal deposits:

- 10% of each employee’s salary goes towards this fund.

- The government contributes an additional 10%.

- Registered pension funds manage these deposits.

2. Fund for pool deposits

- The government contributes an additional 8.5% to this fund.

- The investment of this fund goes towards government initiatives.

Private equity is an option for investment

Like NPS, UPS employees have the freedom to choose their investment model. In addition, they must choose a registered pension fund. Employees benefit directly from the return on investment.

According to the Pension Fund Regulatory and Development Authority (PFRD), if an employee does not choose an investment plan, their funds are automatically allocated to the default model.

Partial withdrawal facility

Under certain circumstances, UPS employees may take partial withdrawals from their funds.  After three years of UPS membership, 25% withdrawal is allowed and A maximum of three withdrawals are allowed during the scheme period. In addition, previous withdrawals under NPS will be counted towards UPS.

The purpose of the Unified Pension Scheme is to provide flexibility and financial security to employees so that they can accumulate substantial retirement funds and access them whenever they need them.

Employees have to choose between UPS and NPS

For both new and existing employees, the government has maintained the choice between NPS and UPS. Under NPS, employees will have the choice to select UPS. Or carry on with NPS without the UPS option. The option cannot be altered once it has been selected.

Which form to choose

1- Current employees: UPS is an option for current employees who joined the government after January 1, 2004, and who have chosen NPS. They must complete Form A2.

- Newly hired staff: This option is also available to new hires who begin working for the company on or after April 1, 2025. They must complete Form A1.

- Retired personnel: UPS also accepts retired employees who were affiliated with NPS. Together with their KYC documentation, they must submit Form B2.

- Employee death: The legally wed spouse must submit Form B6 and KYC documents in the event of the employee's death.

How to submit an online application to switch from NPS to UPS

- First, the worker needs to go to https://enps.nsdl.com/eNPS/NationalPension System.html. Next, select NPS To UPS Migration from the menu for the Unified Pension Scheme.

- Next, input your date of birth and PRAN. Next, enter the captcha to confirm. This will send an OTP to the member's registered mobile number. Put it in. A new declaration window will open as a result.

- Click Proceed to e-Sign after reading it and agreeing.

- Next, enter your Aadhaar information or Virtual ID (VID), which is a 16-digit number, to finish the e-sign verification.

- The transfer request will be successfully registered and an acknowledgement number will be issued following the successful completion of the verification.

Methods for offline application

- The eligible employee must submit the relevant form (such as A1, A2, and B2) pertaining to the process in his office (such as DDO or PAO) or the relevant nodal office.

- The DDO will complete the request process via the CRA transaction website after reviewing the form in light of the employee's service record.

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