The central government has taken a big decision regarding pensions on Saturday. The cabinet led by Prime Minister Narendra Modi has approved the Unified Pension Scheme (UPS) for government employees. Now the Unified Pension Scheme will be started in place of the old and new. According to this, after at least 25 years of service, 50 per cent of the basic payment will be available under UPS, that is, this amount will be given as a pension. At the same time, after 10 years of service, at least Rs 10,000 will be available as a pension.
23 lakh central government employees will benefit from this new pension scheme. This scheme will come into effect from April 1, 2025. Central government employees will be given the option to choose either National Pension System (NPS) or UPS. Existing central government NPS subscribers will also be given the option to switch to UPS. Let us tell you that in March this year, the government constituted a committee to reform NPS under the chairmanship of the then Finance Secretary TV Somanathan. This committee studied many pension schemes in the country and the world.
What is a unified pension scheme?
Unified pension scheme is a pension scheme announced by the Government of India in which retirees will get guaranteed pension. In this scheme, retired employees will be given 50% of their last 12 months’ basic average as a pension after their retirement. To get this pension, the retiree should have completed at least 25 years of service.
Employees who have completed 10 years of service can get this pension, but the percentage of pension will be less, and a minimum pension of Rs 10,000 has been fixed.
What is the eligibility for the Unified Pension Scheme?
For now, Central Government employees who have joined the service on or after 01.01.2004 and have put in a minimum of 10 years of service
What are the key features of the Unified Pension Scheme?
- All Central Government employees who joined service on or before January 1, 2004, and completed 10 years of service are eligible for this scheme.
- The pension amount will be calculated on the basis of 50% of the average salary of the last 12 months of service.
- The inflation will be adjusted in the pension amount
- Employees may also be eligible for a lump sum payment at retirement.
- Employees will get a minimum pension guaranteed
- 60% of the pension of an employee is immediately given to the spouse after her/his demise as a family pension
What is the difference between UPS and old pension schemes?
OLD PENSION SCHEME
The old pension scheme is for government employees who have joined the service before 01/01/2004. In this scheme, the pension amount is calculated based on the last drawn salary and the amount of service done. If we compare it with the UPS pension amount, then OPS gives more pensions.
In OPS, retirees get guaranteed pension, due to which it is ensured that after retirement there is a fixed income. In this scheme, there is also an option for a lump sum payment after retirement.
UNIFIED PENSION SCHEME
UNIFIED PENSION SCHEME is for the employees of the primary central government who have joined the service on or after 01.01.2024. In this scheme, the pension amount is calculated based on the average salary of the last 12 months of service. Generally, in this scheme, a lower pension is given than in OPS.
Like OPS, in this scheme also guaranteed pension is given and along with it, there is also an option of lump sum payment.
FAQ on UNIFIED PENSION SCHEME
1. Is the UPS scheme for private employees?
No. Presently Unified Pension Scheme is only available for central government employees.
2. Is UPS applicable for state government employees?
Currently, UPS is applicable for only central government employees but state governments can adopt this scheme for their employees. however, Maharashtra state is the first state in India as they adopt a unified pension scheme for state government employees.
3. Is UPS better than NPS?
Yes. UPS offers more benefits compared to NPS
4. Is there gratuity in UNIFIED PENSION SCHEME (UPS)?
Yes. A gratuity facility is available in UNIFIED PENSION SCHEME (UPS)
5. Will the pension under UNIFIED PENSION SCHEME (UPS) be linked to inflation?
Yes, pensions under UPS will be indexed to inflation.
6. What happens to the NPS contributions of existing employees?
The government is working on a mechanism to transfer the NPS contributions of existing employees to the UPS.
7. Can I opt out of the UNIFIED PENSION SCHEME (UPS) if I am already enrolled in NPS?
The government is yet to finalize the rules regarding opting out of NPS for employees who are eligible for UPS.
8. Can I contribute to other pension schemes in addition to UNIFIED PENSION SCHEME (UPS)?
Yes, employees can contribute to other pension schemes, such as the National Pension System (NPS), in addition to the UPS. However, the contribution limits may vary.
09. What happens if I leave government service before retirement?
If you leave government service before retirement, you will be eligible for a proportionate pension based on your years of service. You may also be entitled to a refund of your contributions to the UPS.
10. Can I increase my pension contribution under UNIFIED PENSION SCHEME (UPS)?
Yes, you may be able to increase your pension contribution under certain conditions. The specific rules and regulations will be determined by the government.
