New Delhi: In a major reform for government employees, the Union Cabinet has approved the Unified Pension Scheme (UPS), providing an assured pension amounting to 50% of the salary for approximately 23 lakh government employees who joined service under the National Pension System (NPS). This new scheme is set to be implemented from April 1, 2025, and marks a significant change in the pension structure for central government employees.
Key Features of the Unified Pension Scheme
Announcing the Cabinet's decision, Union Minister for Information and Broadcasting, Ashwini Vaishnaw, outlined the major features of the UPS. Under this scheme, government employees will receive 50% of their average basic pay, calculated over the last 12 months before retirement, as a pension. To qualify for this full pension, an employee must have completed a minimum of 25 years of service. There are proportionate benefits for those with a service period of at least 10 years.
The National Pension System (NPS), introduced for government employees joining after April 1, 2004, is based on contributions rather than the defined benefits that characterized the Old Pension Scheme (OPS). With the introduction of the UPS, NPS subscribers will now have the option to switch to this assured pension scheme starting from the next financial year.
Background and Recommendations
The approval of the UPS follows the recommendations of a committee set up by the Finance Ministry, headed by Finance Secretary T.V. Somanathan. The committee was established in response to calls for reforms in the pension structure.
Detailed Benefits of the Unified Pension Scheme
The UPS promises several benefits to government employees, including:
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Assured Pension: Employees will receive 50% of the average basic pay drawn over the last 12 months before retirement for a minimum qualifying service of 25 years. The pension amount will be adjusted proportionally for employees with service periods between 10 and 25 years.
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Assured Family Pension: Family members of the deceased employee will receive 60% of the employee's pension.
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Minimum Pension: A minimum pension of ₹10,000 per month will be provided to retirees with at least 10 years of service.
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Inflation Indexation: The pension, family pension, and minimum pension will be indexed to inflation based on the All India Consumer Price Index for Industrial Workers (AICPI-IW).
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Lump Sum Payment and Gratuity: Upon superannuation, retirees will receive a lump sum payment in addition to gratuity, which is calculated as one-tenth of the monthly emoluments (pay + DA) for every completed six months of service.
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Arrears Payment: The benefits of the UPS will be applicable to employees retiring by March 31, 2025, with arrears being provided accordingly.
Prime Minister Narendra Modi expressed his support for the UPS on social media, stating, "We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future." /BI/
