In a significant move ahead of upcoming assembly elections in a state and a Unified Territory, the Central Government has unveiled the Unified Pension Scheme (UPS), aiming to provide enhanced retirement benefits to central government employees. The announcement comes amid ongoing protests by several non-BJP-ruled states over the existing New Pension Scheme (NPS).
Unified Minister Ashwini Vaishnaw formally announced the launch of the UPS, stating that the scheme is set to benefit approximately 23 lakh central government employees across the country. The new pension framework will be implemented from April 1, 2025, and employees will have the flexibility to choose between continuing with the NPS or opting for the newly introduced UPS.
“Some central employees met with the Prime Minister today. They were with the UPS in the meeting,” Vaishnaw said during the announcement, highlighting the consultative approach adopted by the government in formulating the scheme.
Key Features of the Unified Pension Scheme (UPS)
- Assured Pension
Employees completing a minimum of 25 years in service will receive a pension equivalent to 50 per cent of the average basic salary of the last 12 months prior to retirement.
For employees with service periods between 10 to 25 years, the pension will be provided on a proportionate basis, ensuring support even for shorter tenures.
- Assured Family Pension
In the unfortunate event of a pensioner’s death, their family will be entitled to receive 60 per cent of the last drawn pension amount, offering financial stability and security to the bereaved families.
- Assured Minimum Pension
The scheme guarantees a minimum monthly pension of Rs 10,000 for government employees who have completed at least 10 years of service, ensuring a basic standard of living post-retirement.
ALSO READ: Centre withdraws lateral entry advertisement amid criticism: ‘Focus on social justice’, says PM Modi
Additionally, under the UPS, the government’s contribution towards the pension fund will increase from the current 14 per cent to 18 per cent, while employees will continue to contribute 10 per cent of their salary. This enhanced contribution is expected to substantially boost the retirement corpus of the employees, providing better financial security in their post-service years.
Background and Rationale
The introduction of the UPS follows persistent demands from various employee organizations and non-BJP-ruled states to revert to the Old Pension Scheme (OPS), which offered more assured benefits compared to the NPS. Under the OPS, retired government employees received 50 per cent of their last drawn salary as a monthly pension, with regular increments aligned with the Dearness Allowance (DA) rates.
In response to these demands, the government had constituted a committee last year under Finance Secretary TV Somanathan to review the existing pension structures and suggest reforms. The committee’s recommendations have been instrumental in shaping the UPS, balancing fiscal responsibility with the need for providing assured benefits to government employees.
The launch of the UPS is also seen as a strategic move ahead of the assembly elections, aimed at garnering support from the vast pool of government employees and addressing longstanding grievances related to retirement benefits.
Reactions and Implications
The UPS has been met with a mixed response. Supporters hail it as a progressive step that ensures financial security for government employees and their families, while critics argue that it may place an additional burden on the exchequer.
Financial experts suggest that the scheme’s optional nature allows employees to make informed choices based on their individual financial planning and retirement goals. The increased government contribution is expected to make the UPS an attractive alternative to the NPS for many.
The Unified Pension Scheme represents a significant policy shift in India’s approach to government employee pensions, striving to combine the assured benefits of the old system with the sustainability of the new. As the implementation date approaches, further clarifications and guidelines are expected to ensure a smooth transition and address any concerns of the stakeholders involved.
