Unified Pension Scheme (UPS) for central government employees approved: 5 important things to know Effective April 1, 2025, this scheme is expected to benefit 23 lakh central government employees
The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the Unified Pension Scheme (UPS) for central government employees on Saturday. This scheme will be effective from April 1, 2025, and will benefit 23 lakh central government employees.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} PM Modi said UPS will ensure the "dignity and financial security" of employees. He posted on X that he is proud of all government employees for their hard work towards the country's development.
— narendramodi (@narendramodi) What is Unified Pension Scheme (UPS)?
The Central Government has launched the Unified Pension Scheme (UPS), which provides government workers with a steady pension based on their length of service and most recent basic salary drawn.According to the media reports, central government employees can select between the Unified Pension Scheme (UPS) and the National Pension Scheme (NPS). Additionally, current NPS subscribers of the central government will have the choice to transfer to the UPS. State governments will also be able to choose to implement the Unified Pension Scheme shortly.
According to a Times of India news report, cabinet secretary-designate T V Somanathan said that an actuarial calculation would be conducted every three years to ensure that the liability does not remain unfunded, as was the case with OPS, where the government had to bear the entire liability without the employee contributing anything.
The Times of India news report quoted Ashwini Vaishnaw, Minister of Information and Broadcasting of India, as saying that UPS's "five pillars" will be implemented starting in April of next year. Vaishnaw also said a minimum pension of Rs 10,000 will be offered to those who work for 10 years, with the family pension to the spouse pegged at 60% of the deceased government employee's pension.
A one-time payment upon retirement equal to 10% of the salary and dearness allowance (DA) for every six months of service is also included. The minister stated, "Upon 30 years of service, approximately six months' worth of pay will be disbursed as a lump sum upon retirement," and clarified that this payment is separate from gratuity.
— PIB_India (@PIB_India) Let us now look at five important features of the Unified Pension Scheme, as per a Press Information Bureau released issued on August 25, 2024.
UPS: 5 important things to know
Assured pension: For a minimum qualifying service of 25 years, 50% of the average basic salary drawn for the past 12 months prior to superannuation. Up to a minimum of ten years of service, this compensation is to be commensurate with shorter service periods.Assured family pension: 60% of pension of the employee immediately before her/his demise.Assured minimum pension: After at least ten years of service, @10,000 per month in superannuation. 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 service 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 does not diminish the quantum of secured pension.What is NPS
The Central Government had introduced the defined contribution-based Pension System known as the National Pension System (NPS) replacing the existing system of Defined Benefit Pension with effect from January 01, 2004.In NPS, a government employee contributes towards pension from monthly salary along with matching contribution from the employer. The funds are then invested in earmarked investment schemes through Pension Fund Managers.
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This story originally appeared on: India Times - Author:Faqs of Insurances
