NEW DELHI, Aug 24: The BJP-led NDA government at the centre on Saturday approved the launching of the Unified Pension Scheme (UPS) aiming to provide assured pension, family pension and assured minimum pension to government employees.
“This scheme will benefit 23 lakh central government employees (under the National Pension Scheme),” announced Union Information and Broadcasting Minister Ashwini Vaishnaw. The new scheme will be implemented from April 1, 2025 and employees will have the option to choose between the NPS or UPS.
“Today the Union Cabinet chaired by Prime Minister Narendra Modi has approved Unified Pension Scheme (UPS) for government employees providing for the assured pension…50% assured pension is the first pillar of the scheme…second pillar will be assured family pension…About 23 lakh employees of the central government would benefit from the Unified Pension Scheme (UPS)…There will be an option for the employees to opt between NPS and UPS…” Mr Vaishnaw said.
As per the current pension scheme, employees contribute 10 per cent while the central government contributes 14 percent, which would be increased to 18 percent with the UPS. “Some central employees met with the Prime Minister today. They were with the UPS in the meeting,” said Mr Vaishnaw.
Last year, a committee under Finance Secretary TV Somanathan was set up to review the pension scheme for government employees and suggest changes in the light of the existing framework and structure of the National Pension System.
The finance ministry formed the committee after several non-BJP-ruled states decided to revert to the Old Pension Scheme (OPS) and calls by employee organisation for the same. Under the OPS, retired government employees received 50 per cent of their last-drawn salary as monthly pensions. The amount keeps increasing with the hike in the Dearness Allowance (DA) rates.
Notably, the central government employees will exercise the right to decide whether to stay in the National Pension Scheme (NPS) or join the Unified Pension Scheme. Likewise, the state governments can decide to adopt this new UPS module.
The Unified Pension Scheme will cost the state exchequer Rs 6250 crores in the first year. UPS will apply to all those retired under the NPS from 2004. Mr Modi said the UPS ensured “dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future.”
“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,” the prime minister said in an X post.
- Assured Pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. Proportionate for a lesser service period up to a minimum of 10 years of service.
- Assured Family Pension:@60% of the pension of the employee immediately before her/his demise.
- Assured Minimum Pension:@ 10000 per month on superannuation after a minimum of 10 years of service.
- Inflation Indexation:On assured pension, on assured family pension and assured minimum pension Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of serving employees Lump sum payment at superannuation in addition to gratuity. 1/10th of monthly emoluments (pay + DA) as on the date of superannuation for every completed six months of service this payment will not reduce the quantum of assured pension.
(Manas Dasgupta)