In a landmark decision, the Cabinet led by Prime Minister Narendra Modi has approved the Unified Pension Scheme (UPS), which is set to take effect from April 1, 2025. This new scheme is poised to bring significant changes to the pension structure for Central Government employees, offering enhanced benefits and greater financial security in retirement. Here’s a detailed breakdown of the UPS in 10 key points:
Assured Pension:
Retirees will now receive 50% of their average basic pay over the last 12 months before retirement as a pension. This applies to employees with a minimum qualifying service of 25 years, with a proportionate pension for those with less service, down to a minimum of 10 years.
Increased Government Contribution:
The Government will increase its contribution to the pension scheme from 14% to 18.5%. Importantly, the contribution required from employees will remain unchanged.
Assured Family Pension:
In the unfortunate event of a pensioner’s demise, their family will receive 60% of the pension that the employee was receiving, ensuring continued financial support.
Assured Minimum Pension:
All retirees with at least 10 years of service will be guaranteed a minimum pension of ₹10,000 per month upon superannuation.
Inflation Protection:
Pensions will be indexed to inflation, with Dearness Relief based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to the adjustments made for serving employees.
Lump-Sum Payment:
In addition to gratuity, retirees will receive a lump-sum payment equivalent to 1/10th of their monthly emoluments (pay + DA) for every six months of service completed. This payment will be provided without reducing the assured pension amount.
Benefits for Past Retirees:
The provisions of UPS will also apply to past retirees under the National Pension System (NPS), who will receive arrears with interest at Public Provident Fund (PPF) rates.
Optional Enrollment:
The UPS will be available as an option for current and future employees. Those under the NPS or taking Voluntary Retirement Scheme (VRS) will have the option to join UPS. Once exercised, this choice will be final.
Wide Impact:
The UPS will be implemented by the Central Government, benefiting approximately 23 lakh Central Government employees.
State Government Adoption:
The same UPS framework has been designed for adoption by State Governments. If adopted, it could potentially benefit over 90 lakh government employees currently under the NPS.
The approval of the Unified Pension Scheme marks a significant step toward securing the future of government employees, reflecting the government’s commitment to providing robust post-retirement benefits. The scheme’s design, with its emphasis on inflation protection, assured pensions, and comprehensive family support, aims to create a more secure and predictable retirement landscape for millions of public servants across India.
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