The Union Cabinet approved the Unified Pension Scheme (UPS) for central government employees. This scheme will be effective from April 1, 2025, and will benefit 23 lakh central government employees.
Unified Pension Scheme (UPS)
The Central Government has introduced the Unified Pension Scheme (UPS), which guarantees a stable pension for government employees based on their service duration and their most recent basic salary.
The scheme includes five key features:
1)Guaranteed Pension: Employees with at least 25 years of service will receive 50% of the average basic salary from the last 12 months before retirement, who joined the service after January 1, 2004. For those with less than ten years of service, the pension will be adjusted proportionately.
The employee's contribution would remain 10 per cent, while the government contribution would increase to 18.5 per cent.
2) Guaranteed Family Pension: In the event of an employee's death, their family will receive 60% of the pension that the employee was receiving at the time of their death.
3) Minimum Guaranteed Pension: Employees with at least ten years of service will be assured a pension of ₹10,000 per month upon retirement.
4) Inflation Adjustment: The assured pension, family pension, and minimum pension will be adjusted for inflation. This adjustment will be based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to what is applied to service employees.
5) Lump Sum Payment at Retirement: In addition to gratuity, retirees will receive a lump sum payment equivalent to 1/10th of their monthly pay and Dearness Allowance (DA) as of the retirement date for every six months of service. This lump sum payment will not reduce the amount of the pension secured.
National Pension Scheme (NPS):
Regulated and administered by the Pension Fund Regulatory and Development Authority (PFRDA).
Government Contributions:
Employees contribute 10% of their basic salary.
The government contributes 14% of the employee’s basic salary.
Pension Amount: Pension is not fixed and depends on market conditions due to the market-linked nature of the scheme.
Family Pension: Family pension is based on the accumulated corpus and the annuity plan selected at retirement.
Applicability: NPS applies to all government employees (excluding armed forces) who joined the central government from January 1, 2004, and is also available for private-sector employees.
Old Pension Scheme (OPS):
Pension Benefits:
Retirees receive 50% of their last drawn salary as a monthly pension.
Pension amount increases with dearness allowance (DA) hikes.
Gratuity: Employees are eligible for a maximum gratuity payment of ₹20 lakh upon retirement.
Family Pension: Continues to be provided to the family if the retiree passes away.
Contribution Deductions: No salary deductions for pension contributions under OPS, unlike NPS.
