The finance ministry has officially notified the implementation of the Unified Pension Scheme (UPS) as an optional framework under the National Pension System (NPS) for central government employees. The new scheme, effective from April 1, 2025, will provide guaranteed retirement benefits for employees. Use Calculator: Unified Pension Calculator and calculate your pension.
The scheme applies to central government employees currently covered under the NPS who choose this option. “Pension Fund Regulatory and Development Authority (PFRDA) may issue regulations for operationalizing the Unified Pension Scheme,” the finance ministry stated.
Key Features of the Unified Pension Scheme
- Guaranteed Pension: Employees completing 25 years of service will receive 50% of the average basic pay drawn during the 12 months prior to retirement.
- Proportional Pension: Employees with less than 25 years but more than 10 years of service will receive a proportionate pension.
- Effective Date: The scheme will become operational on April 1, 2025.
Development of the Scheme
The contours of the UPS were finalized after discussions under the Joint Consultative Machinery, a platform for resolving disputes between central government employees and the government.
The union cabinet approved the policy on August 24, 2024, benefiting nearly 2.3 million central government employees. This decision was made in response to demands from employee unions for a pension system that guarantees retirement benefits. Use Calculator: Unified Pension Calculator and calculate your pension.
Background and Context
The government initiated the reworking of the existing pension system, the New Pension Scheme (NPS), after widespread dissatisfaction. A high-level committee, led by T.V. Somanathan, the then-finance secretary, was formed in April 2023 to address concerns.
The dissatisfaction with NPS had become a significant political issue, with some opposition-ruled states reverting to the old pension scheme (OPS), which posed a financial burden on the government. The introduction of UPS is seen as a balanced approach to addressing employee concerns while maintaining fiscal responsibility.
With its launch, the Unified Pension Scheme promises to provide central government employees with greater financial security post-retirement. Use Calculator: Unified Pension Calculator and calculate your pension.
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