In a significant move aimed at ensuring financial security for government employees post-retirement, the Central Government has introduced the Unified Pension Scheme (UPS), set to take effect from April 1, 2025. This comprehensive scheme will replace the existing National Pension System (NPS) for central government employees, offering an assured pension and several other benefits.
Key Features of the Unified Pension Scheme (UPS):
1. Assured Pension:
- Employees are guaranteed 50% of their average basic pay drawn over the last 12 months prior to superannuation, provided they have completed a minimum qualifying service of 25 years.
- For employees with less service, the pension will be proportional, with a minimum qualifying period of 10 years.
2. Assured Family Pension:
- In the unfortunate event of an employee's demise, their family will receive 60% of the pension that the employee was receiving immediately before their passing.
3. Assured Minimum Pension:
- A minimum pension of ₹10,000 per month is assured after a minimum of 10 years of service upon superannuation.
4. Inflation Indexation:
- Pensions under the UPS will be indexed to inflation, with adjustments based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to the existing dearness relief provided to serving employees.
5. Lump-Sum Payment at Superannuation:
- In addition to gratuity, employees will receive a lump-sum payment at the time of retirement. This will be 1/10th of their monthly emolument (pay + DA) for every six months of completed service. This payment will not affect the assured pension amount.
Other Notable Features:
- Retrospective Application: The UPS provisions will apply to past retirees of the NPS who have already superannuated. Arrears for the past period will be paid with interest at the PPF rates.
- Optional Enrollment:Employees, both current and future, will have the option to choose between the NPS and UPS. However, once chosen, this decision will be irreversible.
- No Increase in Employee Contribution:** The government has assured that there will be no increase in employee contributions. However, the government’s contribution will rise from 14% to 18.5% to facilitate the implementation of UPS.
Implementation and Impact:
The UPS will be implemented by the Central Government and is expected to benefit approximately 23 lakh central government employees. Moreover, the scheme has been designed to be adaptable by state governments, potentially benefiting over 90 lakh government employees currently enrolled in the NPS, should the states decide to adopt it.
The announcement of the UPS marks a major shift in the government's approach to securing the financial future of its employees, offering a more predictable and assured retirement benefit compared to the NPS.
For further details, employees are advised to review the official government notifications and consult their respective departments.
This development is seen as a critical step in addressing the concerns raised by employees regarding the uncertainties associated with the NPS, and it underscores the government's commitment to providing a stable post-retirement life for its workforce.
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