In August 2024, the Centre introduced the Unified Pension Scheme (UPS), an alternative to the National Pension System (NPS), which would be adopted on April 1, 2025, according to the government’s announcement.
For a long time, central government employees have demanded the reinstatement of the Old Pension Scheme (OPS) in favour of the NPS, which was implemented in 2004.
Here’s all you need to know about UPS, which is expected to benefit 23 lakh Central Government employees.
What is the Unified Pension Scheme:
Like the OPS, the Unified Pension Scheme (UPS) provides a guaranteed pension. It aims to give stability, dignity, and financial security to government employees after retirement, assuring their well-being and a secure future.
Currently, government employees are covered by the National Pension System (NPS), and now have the choice of continuing with NPS or switching to the UPS plan.
However, once employees have chosen UPS, their decision is permanent and cannot be changed.
Key features of the Unified Pension Scheme:
It’s noteworthy that UPS promises retirees a fixed pension, unlike NPS.
According to the government’s notification, the UPS has five key features:
I. Assured Pension: Employees with at least 25 years of qualifying service will receive an assured pension of 50% of their average basic salary from the previous 12 months before superannuation.
The payment would be correspondingly reduced for shorter service periods, up to a minimum of 10 years of service.
ii. Assured minimum pension: The UPS guarantees a monthly pension of Rs 10,000 for superannuation after at least 10 years of service.
iii. Assured family pension: If a retiree dies, their immediate family is entitled to 60% of the pension last taken by the retiree.
iv. Inflation indexation: Dearness relief for three types of pensions will be determined using the All India Consumer Price Index for Industrial Workers, which is similar to serving workers.
v. Lumpsum payment at superannuation: In addition to gratuity, lump sum payments upon superannuation are computed as 1/10th of the monthly compensation (pay + dearness allowance) on the day of superannuation for every six months of service completed.
