UPS vs NPS Rs 2 Lakh/Month Pension Calculations: Basic pay, DA Rs 30,000 at 27 years of age? Here’s how you may get Rs 2 lakh pension at retirement

UPS vs NPS Monthly Pension Calculations: National Pension System (NPS) is the default pension scheme for central government employees, but they can also select Unified Pension System (UPS) now. Both retirement schemes offer a lump sum amount and a monthly pension at retirement. However, the contribution amount and the way the lump sum amount and the monthly pension are calculated are different in both. But if you have joined a government job at 27 years of age and your basic salary and dearness allowance (DA) is Rs 30,000, how may you get at least Rs 2 lakh monthly pension in NPS and UPS?

NPS contribution

The employee contribution in their NPS corpus is a minimum of 10 per cent of their basic salary and dearness allowance (DA).

The employer contribution is 14 per cent of their basic pay and DA. 

The amount is invested in an equal mix of equity and fixed interest rate assets. 

NPS exit

At 60 years of age, the account holder can withdraw up to 60 per cent of their retirement corpus. From the remaining 40 per cent, they need to purchase an annuity plan.

If they want, they can purchase the annuity from 100 per cent of their corpus.

UPS contribution

The employee contribution is 10 per cent of their basic pay and DA, while the employer contribution is 18.5 per cent.

The amount is invested in equity, fixed interest rate assets, and a pooled investment, which is a kind of contingency fund. 

The scheme provides a minimum Rs 10,000 assured pension on completion of 10 years of service. The maximum pension is 50 per cent of the 12-month basic pay average immediately prior to superannuation. 

UPS exit

The account holder can take an exit at 60 years of age. They will get a lump sum amount at superannuation and a final withdrawal payout at the same stage.

They will get a monthly pension. Along with that, they also get dearness relief (DR) as per the prevailing rate.  

Calculation conditions to get Rs 2 lakh/month pension in NPS, UPS

Basic pay and DA- Rs 30,000
Current age- 27 years
Pensionable service- 33 years
Retirement age- 60
Annual basic pay growth- 5 per cent
DA growth/year- 5 per cent
Return from investment- 10 per cent
Final withdrawal percentage- 47 per cent
Annuity purchase percentage- 53 per cent
Annuity return rate- 6.5 per cent
Life expectancy of self- 80 years
Life expectancy of surviving spouse- 80 years

UPS payout 

Monthly payout after superannuation- Rs 2,02,202 + DR
Lump sum payout at superannuation- Rs 59,24,053
Final withdrawal payout at superannuation- Rs 36,437,607
Total monthly payouts to subscribers in retirement phase- Rs  7,94,65,343
Aggregate expected benefits to be received by the subscriber- Rs 12,18,27,002

NPS payout 

Monthly payout after superannuation- Rs 2,67,080
Lump sum payout at superannuation- Not applicable 
Final withdrawal payout at superannuation- Rs 4,37,25,128
Total monthly payouts to subscribers in retirement phase- Rs 6,40,99,177
Aggregate expected benefits to be received by the subscriber- Rs 10,78,24,305

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)