The Centre Government announced the Unified Pension Scheme (UPS) in which government employees will get an assured pension, family pension and an assured minimum pension. The new pension scheme will come into force from April 1, 2025.
The scheme, approved by the Union Cabinet today, guarantees a pension of 50 per cent of the average basic pay drawn over the last 12 months, provided the employee has completed a minimum of 25 years of service. For those with lesser service, the pension will be proportionate.
It ensures a family pension of 60 per cent of the pension of the employee immediately before their death. It also guarantees an assured minimum pension of Rs 10,000 per month on superannuation after a minimum of 10 years of service.
Prime Minister Narendra Modi, who held the Union Cabinet meeting, said the UPS ensured dignity and financial security for government employees.
“We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future,” he tweeted.
About 23 lakh central government employees, who joined service under the National Pension System (NPS), would benefit from the UPS, Railways Minister Ashwini Vaishnaw said.
“Today, the Union Cabinet has approved UPS for government employees providing for assured pension. 50 per cent assured pension is the first pillar of the scheme and the second pillar will be assured family pension,” he said.
“There will be an option for employees to opt between the NPS and UPS,” he added.
Briefing media, Cabinet Secretary-designate TV Somanathan said the new scheme will be applicable from April 1, 2025. “The benefits of the UPS are applicable for those retired and retiring till March 31, 2025, with arrears,” he added.
Under the scheme, there will be a lump-sum payment at superannuation in addition to gratuity and one-tenth of monthly emolument (pay + DA (Dearness Allowance)) on the date of superannuation for every completed six months of service. This payment will not reduce the quantum of assured pension for employees.
Last year, the finance ministry set up a committee under Finance Secretary TV Somanathan to review the pension scheme for government employees and suggest any changes, if needed, in light of the existing framework and structure of the NPS.
The Centre had said earlier that there were no immediate plans to implement the Old Pension Scheme (OPS) for its employees, despite protests in non-BJP-ruled states demanding the implementation of the same.
Several non-BJP-ruled states have decided to revert to the DA-linked OPS and employee organisations in some other states have raised demands for the same.
The OPS is a defined benefit scheme that guarantees half of the last salary drawn as a pension for life, with adjustments based on pay commission recommendations.
In contrast, the NPS is a defined contribution scheme where government employees contribute 10 per cent of their basic salary, and the government matches this contribution with 14 per cent.