Center approves Unified Pension Scheme: Who is eligible? Check the minimum amount

Unified Pension Scheme: The central government gave the approval on Saturday Unified Pension Scheme (UPS), which promises benefits of over 23 lakhs Government employees And works as a substitute National Pension System. The plan was approved in the Union Cabinet meeting held yesterday under the chairmanship of Prime Minister Narendra Modi. PM Modi took X and wrote, “The Unified Pension Scheme ensures dignity and financial security to government employees, aligning with our commitment to their welfare and secure future.”

It is to be noted that in 2023, the Finance Ministry set up a committee headed by Finance Secretary TV Somanathan to examine and review the existing Pension Scheme for Government Employees – NPS.

Unified Pension Scheme: Option to choose between UPS and NPS

The National Pension System (NPS) is an option for government employees who started their duties after 1 April 2004. Employees with NPS can opt for UPS transition guaranteeing them Preset Pension, Minimum Guaranteed Pension and Family Pension. It will start from the next financial year.

Unified Pension Scheme: Differences among States

As the Union Cabinet approved the UPS, BJP-ruled states welcomed the move, however, non-BJP-ruled states have decided to go back to the old pension scheme (OPS), PTI reported.

Unified Pension Scheme: Major Benefits

• Retirees with more than 25 years of service are guaranteed 50% of their previous year's average pay as pension.
• Employees with minimum 10 years of service will get partially adjusted pension.
• The family-oriented policy ensures that 60% of the basic pension is paid to the family in case of death of an employee.
• No retiree shall receive less than Rs. 10,000 per month after minimum 10 years of service.
• All retirees are included in the pension scheme irrespective of the number of years invested in the company.

Unified Pension Scheme: Salient Features

• Details are provided about Family Pension and Minimum Pension.
• Additional allowances for cost of living adjustment based on All India Consumer Price Index for industrial workers are mentioned.
• A handsome amount of money after retirement is highlighted.
• Retirement bonus is calculated as 1/10th of monthly earnings for every half year of service completed without affecting the promised pension.

Unified Pension Scheme: What is Eligibility?

• The new scheme will be implemented from April 1, 2025, benefiting pensioners with pending payments.
• Around 23 lakh government employees are expected to benefit from this programme.
• Information and Broadcasting Minister Ashwini Vaishnav highlighted the positive effects of the new scheme.
• Prime Minister Narendra Modi gave this news to a delegation representing central government employees.
• A delegation of the Joint Consultative Machinery expressed satisfaction over the decision of the Cabinet regarding the Common Pension Scheme.

Unified Pension Scheme: UPS vs Old Pension Scheme

• The OPS scheme offered retired government employees a monthly pension equal to half of their last drawn salary, adjusted as per DA rates. However, the financial sustainability of the OPS system is questionable as it is non-cooperative, which places an increasing financial burden on the government.
• “The benefits of the Unified Pension Scheme will be applicable to those who have retired or retired under NPS till March 31, 2025. They will be eligible for dues,” said Somnath.
• Government employees opting for UPS will not have to bear additional financial burden. Their contribution will remain at 10 percent, while the government, on the other hand, will increase its contribution from 14 percent to 18.5 percent.
• Kuldeep Kumar, partner, Mainstay Tax Advisors, predicts that government employees will respond positively to the decision. A universal pension scheme not only guarantees a secure retirement income for themselves and their loved ones, but also provides inflation-adjusted benefits.
• Since 2004, employees serving the Central Government have been made part of the National Pension Scheme. The scheme is characterized by the fact that it provides an annuity or one-time payment, the amount of which is derived from the returns from the market on the accumulated contributions of both the government and the employees.