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What Is Unified Pension Scheme That Will Benefit 23 Lakh Government Employees | Explained

Cabinet Secretary-designate TV Somanathan said that the new scheme is applicable from April 1, 2025.

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The Unified Pension Scheme is built on five pillars |
The Unified Pension Scheme is built on five pillars | Photo: Representational Image
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The Centre on Saturday approved the Unified Pension Scheme (UPS), which would benefit as many as 23 lakh government employees who joined service under the National Pension System (NPS).

NPS is applicable for government employees who joined the service after April 1, 2004. The system is based on the context of contribution rather than the defined benefit applicable for employees before the NPS.

Union Minister Ashwini Vaishnaw noted that Unified Pension Scheme's introduction came in response to the widespread demand of changes in the New Pension Scheme by government employees.

Following the demands, Vaishnaw noted that Prime Minister Narendra Modi constituted a committee under the chairmanship of Cabinet Secretary TV Somanath. After 100s of meetings with different concerned organisations and nearly all the states, the committee recommended the UPS and the Union Cabinet approved it.

What Is Unified Pension Scheme?

The Unified Pension Scheme (UPS) is aimed at providing assured pension for government employees. Ashwini Vaishnaw said that the scheme is built on five pillars.

The first pillar is that of the assured pension, which guarantees a post-retirement income for all retired government employees. Other pillars include the assured family and minimum pension, which provide a wider financial security under the scheme.

UPS Features

  • Assured Pension: The 50 per cent assured pension amount will be the average of basic pay of 12 months before superannuation. The eligibility service length for receiving this amount is 25 years. However, the pension would be proportionate for anyone with less than 25 years but more than 10 years of service.

  • Assured Family Pension: This allows the immediate withdrawal of 60 per cent of the employee's pension before her/his demise. This guarantees financial security for the government employee's dependents.

  • Assured Minimum Pension: The government employees will be eligible to receive Rs 10,000 per month on superannuation after minimum ten years of service.

  • Inflation Indexation: The value will be adjusted on all thee kinds, assured pension, assured family pension and assured minimum pension. In case of service employees, dearness relief will be based on All India Consumer Price Index for Industrial Workers (AICPI-IW).

  • Lump Sum Payment: In addition to gratuity, a lump sum payment will be made at superannuation. Notably 1/10th of the monthly emoluments (pay + Dearness Allowance [DA]) as on the date of superannuation for every completed six months of service. This payment will not reduce the quantum of assured pension.

There will be an option for employees now to opt between the NPS and the UPS, which offers assured pension applicable from the beginning of the next financial year.

Cabinet Secretary-designate TV Somanathan said that the new scheme is applicable from April 1, 2025, adding that the benefits of the Unified Pension Scheme are applicable for those retired and retiring till March 31, 2025, with arrears.