24/08/2024
The Unified Pension Scheme (UPS), approved by the Indian Union Cabinet on August 24, 2024, represents a significant overhaul of the pension framework for central government employees. This scheme is designed to provide greater financial security in retirement through a blend of assured pensions, family pensions, and minimum guaranteed benefits.
# # # Key Features of the Unified Pension Scheme (UPS):
1. Guaranteed Pension:
- Employees are assured a pension amounting to 50% of their average basic pay from the last 12 months prior to retirement. This is contingent on the employee completing at least 25 years of service. For those with less service, the pension will be proportionate to the years served.
2. Family Pension:
- In the event of the employee's death, the scheme provides for a family pension equivalent to 60% of the pension that the employee was receiving. This ensures ongoing financial support for the family.
3. Minimum Pension:
- The UPS guarantees a minimum pension of ₹10,000 per month for employees who retire after a minimum of 10 years of service. This feature is particularly important for lower-income employees, ensuring they receive a basic level of income in retirement.
4. Lump-Sum Payment:
- Upon retirement, employees will receive a lump-sum payment that includes gratuity and one-tenth of their monthly emolument (basic pay + Dearness Allowance) for every completed six months of service. This is in addition to the assured pension, providing retirees with an immediate financial cushion.
5. Choice Between UPS and NPS:
- The scheme offers flexibility by allowing employees to choose between the new UPS and the existing National Pension System (NPS). The NPS is a defined contribution scheme, where employees contribute 10% of their basic salary, and the government contributes 14%. In contrast, the UPS does not require any contribution from employee while the government will contribute 18.5% of basic pay per month for pension contribution guaranteeing a definite pension amount upon retirement of employees.
6. Implementation:
- The scheme is scheduled to come into force on April 1, 2025, and is expected to benefit approximately 23 lakh central government employees. The government has allocated ₹6,250 crore for the first year of implementation.
A lot more is yet to come … let’s wait for the detailed official notification.
~ AD Talks.🙏