30/09/2024
The third term of the Narendra Modi Government began with the introduction of the Unified Pension Scheme. Combining the ideal aspects of the Old Pension Scheme, that is, an assured pension for the individual and their families, the new programme draws from the New Pension Scheme as well. Under the NPS, the government contribution was capped at 14%; under the UPS, it increased to more than 18%.
The UPS guarantees a pension of Rs. 10,000 for anyone with a minimum service of 10 years. For the ones who have served for 25 years or more, the pension has been calculated at 50% of the average basic pay drawn in the last 12 months.
However, there is more to the story of UPS, NPS, and OPS. The Old Pension Scheme came without any contribution from the employees. That is, the government was bearing the entire contribution burden, which became the foundation of an imminent fiscal crisis in states like Himachal Pradesh. In September 2024, the Himachal Chief Minister, under the Congress state government, announced that the salaries would be credited on the 5th of every month, while the pensions would be credited on the 10th of every month. The reasoning cited was the government's inability to decrease expenditure in the wake of declining revenues.
Therefore, the introduction of the Unified Pension Scheme solves multiple problems. In the beginning, it’ll benefit 23 Lakh Central Government employees, but once embraced by the state governments, it could potentially benefit 90 Lakh State Government Employees.
1) An assured pension.
2) An assured pension for the family.
3) Better management of the state’s finances.
