The Cabinet led by Prime Minister Narendra Modi has approved the Unified Pension Scheme (UPS) for central government employees. The announcement was made by Railway Minister Ashwini Vaishnaw during a press briefing, where he highlighted the potential benefits of the scheme, which is set to impact around 23 lakh government employees.
Key Features of the Unified Pension Scheme
The Unified Pension Scheme, slated to take effect from April 1, 2025, offers central government employees a choice between continuing with the National Pension Scheme (NPS) or switching to the new UPS. Existing NPS subscribers will also have the option to transition to the UPS.
Some of the notable features of the UPS include:
- Assured Pension: Employees will receive 50% of their average basic pay from the last 12 months before retirement, provided they have a minimum of 25 years of qualifying service. For those with less service, the pension will be proportionate, with a minimum requirement of 10 years of service.
- Family Pension: In the event of the employee’s demise, the family will receive 60% of the employee’s last drawn pension.
- Minimum Pension Guarantee: A minimum pension of ₹10,000 per month will be assured to employees upon retirement, provided they have served for at least 10 years.
- Inflation Indexation: Pensions, including family and minimum pensions, will be indexed to inflation, based on the All India Consumer Price Index for Industrial Workers (AICPI-W), similar to how serving employees’ dearness relief is calculated.
- Lump-Sum Payment: Upon retirement, employees will receive a lump-sum payment in addition to their gratuity. This will be calculated as one-tenth of their monthly emolument (pay + DA) as on the date of superannuation for every completed six months of service. Importantly, this payment will not reduce the amount of assured pension.
A New Era for Government Pensions
The introduction of the Unified Pension Scheme marks a new chapter in pension benefits for central government employees, providing them with more flexibility and financial security in their retirement years. The scheme’s launch in 2025 will give employees ample time to evaluate their options between the NPS and UPS, ensuring that they make the best choice for their future.