BT, Mumbai: The Modi government is set to implement a new Unified Pension Scheme (UPS) for central government employees, which will be optional and available from April 1, 2025. Employees currently under the National Pension System (NPS) will have the choice to switch to this new scheme. The primary aim of UPS is to provide assured pension, family pension, and a minimum pension to government employees. The scheme was approved by the Union Cabinet on Saturday, August 24, under the leadership of Prime Minister Narendra Modi.
Union Minister Ashwini Vaishnaw announced that approximately 2.3 million central government employees will benefit from this scheme. If adopted by state governments, more than 9 million government employees currently under NPS could also benefit from UPS. Here are 10 key features of the new assured pension scheme:
1. Assured Pension: Retired employees will receive a pension equivalent to 50% of their average basic salary from the last 12 months before retirement. This benefit will be available to employees who have completed at least 25 years of service. For those with less than 25 years of service but at least 10 years, a proportional pension will be provided.
2. Increased Government Contribution: The central government’s contribution to the pension fund has been increased from 14% to 18.5%. There will be no change in the employees’ contribution rate.
3. Assured Family Pension: In case of the untimely death of a pensioner, the family will receive 60% of the pension that the employee was receiving.
4. Assured Minimum Pension: A minimum pension of ₹10,000 per month will be provided to employees who retire after a minimum of 10 years of service.
5. Inflation Protection: The pension will be linked to inflation, with adjustments based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to the current practice for active employees.
6. Lump-Sum Payment at Retirement: In addition to the gratuity, a lump-sum payment equivalent to 1/10th of the salary (including DA) for every six months of service will be provided at the time of retirement. This payment will not reduce the pension amount.
7. Provisions for UPS: The provisions of UPS will also apply to former retirees who have already retired under NPS. Any past dues will be paid with interest at PPF rates.
8. UPS Option: The scheme will be optional for employees. Current and future NPS/VRS (Voluntary Retirement Scheme) employees can choose to join UPS. However, once this option is selected, it cannot be changed.
9. Implementation by the Central Government: The scheme is being implemented by the central government, benefiting approximately 2.3 million central government employees.
10. State Government Adoption: State governments may also adopt this scheme, potentially benefiting over 9 million government employees currently under NPS.
This new pension scheme is expected to provide a more secure and stable post-retirement life for government employees, ensuring that they and their families are well-protected financially.