New Delhi: The Cabinet has approved the Unified Pension Scheme (UPS) for retired government employees to provide them with assured pension post-retirement. The Union Minister of Information and Broadcasting and Railway Minister Ashwini Vaishnaw said that the scheme will benefit around 23 lakh central government employees. The scheme will come into effect from April 1, 2025.
Some of the salient features of the UPS are as follows:
- Assured pension amounting to 50% of the average basic pay drawn over the last 12 months before superannuation for a minimum qualifying service of 25 years
- Proportionate amount for lesser service up to a minimum of 10 years of service
- Family pension at 60% of the pension amount of the employee in case of her/his demise
- Assured minimum pension at Rs 10,000 per month on superannuation after a minimum of 10 years of service
- Inflation Indexation: Dearness relief will be applicable on the above pensions which will be calculated based on the All India Consumer Price Index for Industrial Workers
- Lump-sum payment at superannuation in addition to gratuity calculated as 1/10th of the monthly emolument (pay+DA) on the date of superannuation for every 6 months of service completed
While the New Pension Scheme (NPS) created a corpus wherein the pension was funded by the employee himself/herself with a matching contribution from the government, the UPS will provide an assured pension to the retired govt. employees based on their average basic pay. Moreover, the Old Pension Scheme (OPS) provided employees with a monthly pension equal to 50% of their last drawn salary. It was discontinued as it was non-contributory and thus not fiscally sustainable. Currently, government employees will have the option to choose between NPS and UPS, with existing employees having the option to switch to the new scheme. The state governments have been given the option to opt for UPS if they wish to.
