The Union Cabinet has approved the Unified Pension Scheme (UPS), offering 50% of salary as a guaranteed pension to 23 lakh central government employees, ensuring financial security post-retirement.
The Union Cabinet, under the leadership of Prime Minister Narendra Modi, has approved a significant new pension scheme called the Unified Pension Scheme (UPS). This move is set to benefit 23 lakh central government employees by providing them with an option to secure 50% of their salary as a pension after retirement. The scheme will become effective from April 1, 2025.
- Under the UPS, central government employees will receive a pension that is 50% of their average basic pay drawn over the last 12 months before retirement.
- This pension is guaranteed for employees who have completed a minimum qualifying service of 25 years. For those who have served between 10 to 25 years, the pension will be proportionately calculated based on the years of service.
2. Family Pension
- In the unfortunate event of an employee's demise, the family will receive a pension amounting to 60% of the employee’s pension immediately before their passing. This ensures that the family is financially supported even after the loss of the earning member.
3. Minimum Pension Guarantee
- The scheme also guarantees a minimum pension of ₹10,000 per month for those who retire after completing at least 10 years of service. This acts as a safety net, ensuring that all eligible retirees receive a basic minimum pension.
4. Inflation Protection
- To protect the pension from the eroding effects of inflation, the UPS provides inflation indexation. The pension, family pension, and minimum pension will be adjusted according to the Dearness Relief, which is based on the All India Consumer Price Index for Industrial Workers (AICPI-W), similar to the adjustments made for serving employees.
5. Lump-Sum Payment
- In addition to the pension, employees will also receive a lump-sum payment at the time of retirement. This amount will be calculated as 1/10th of their monthly emolument (pay + DA) as on the date of retirement for every six months of completed service. Importantly, this payment will not reduce the amount of assured pension.
Options for Employees
- Central government employees will have the freedom to choose between the National Pension Scheme (NPS) and the new Unified Pension Scheme (UPS). This gives employees the flexibility to select a scheme that best meets their financial needs and retirement goals.
- Additionally, employees who are already enrolled in the NPS will be allowed to switch to the UPS if they prefer the new scheme’s benefits.
The introduction of the Unified Pension Scheme (UPS) is a significant step towards ensuring financial security for central government employees after retirement. By offering a guaranteed pension, inflation protection, and additional benefits like a family pension and a lump-sum payment, the scheme provides comprehensive support to employees and their families. The flexibility to choose between the NPS and UPS further empowers employees to make decisions best suited to their financial futures. This new scheme reflects the government’s commitment to the welfare of its employees and their families.
