In a significant move to enhance retirement benefits for public servants, the Indian government, under the leadership of Prime Minister Narendra Modi, announced the Unified Pension Scheme (UPS) for central government employees on Saturday. This comprehensive scheme, set to come into effect from April 1, 2025, aims to amalgamate the advantages of the Old Pension Scheme (OPS) with the existing National Pension Scheme (NPS), ensuring a more secure future for 23 lakh government employees.
The UPS represents an upgrade to the current NPS for government employees. While employees will continue contributing 10% of their income to the scheme, the government’s contribution has been significantly increased to 18.5%, compared to the previous 14%. The scheme offers a comprehensive package of benefits, including an assured pension, inflation indexation, and a family pension.
Here are the key highlights of the UPS:
Assured Pension:
Under the UPS, subscribers will receive a guaranteed pension, calculated as 50% of the average basic pay drawn over the last 12 months before retirement. This benefit is available for employees with at least 25 years of service. For those with shorter service periods, the pension will be prorated accordingly, with a minimum service requirement of 10 years.Assured Family Pension:
The UPS also provides a guaranteed family pension. In the event of a subscriber’s demise, their family members will receive 60% of the pension.Assured Minimum Pension:
Even employees retiring before completing 25 years of service are eligible for a pension under the UPS. The scheme guarantees a minimum pension of ₹10,000 per month for those retiring after a minimum of 10 years of service.Inflation Indexation:
The assured pension, family pension, and minimum pension benefits under the UPS will be adjusted for inflation. The Dearness Relief will be calculated based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to the provision for active employees.Lumpsum Payment:
In addition to the pension and gratuity, UPS subscribers will receive a lump sum payment at the time of retirement. The lump sum amount is calculated as 1/10th of monthly emoluments (pay + DA) for every completed six months of service. Notably, this payment does not affect the assured pension amount.The UPS is poised to significantly enhance retirement benefits for central government employees, providing them with a more stable and secure financial future. By combining features of both the OPS and NPS, the scheme aims to strike a balance between providing a guaranteed income stream and encouraging individual savings for retirement.
