The government of India announced good news to the central government employees. It has been decided to implement a new Unified Pension Scheme (UPS) in place of the Contributory Pension Scheme (CPS).
With UPS, employees who have completed at least 25 years of service will get 50 percent of their salary as pension. For the rest, service-based pension is applicable. Atleast 10 years of service should be completed to get minimum pension.
This new scheme will be applicable to around 23 lakh employees who have joined National Pension System (NPS) as part of Bhagaswamya Pension Scheme.
Currently NPS is applicable to the employees who joined the union services after 1st April 2004. All of them will come under UPS. At present, pension is coming on the basis of the contribution made by the employee in NPS. Earlier, the pension was up to 50 percent of the salary irrespective of the contribution. The Union Cabinet, which met under the leadership of Prime Minister Narendra Modi on Saturday, approved the UPS policy. Post which, Union Information and Broadcasting Minister Ashwini Vaishnav revealed these details to the media.
Key Facts of UPS Scheme
- 50%.. Half of the average of the basic pay received in the 12 months preceding retirement will be received as pension.
- All NPS subscribers can migrate to UPS. UPS will come into effect from the beginning of the next financial year (April 1, 2025).
- 25 years is the minimum service to get half pension.
- 60% is the percentage of pension that a pensioner’s spouse receives on their death.
- Rs.10,000 is The minimum pension provided to an employee.
- 10 years is the minimum service required to qualify for pension under UPS.
- This is the calculation of inflation index.. Drought compensation (Dearness Relief-DR) for Guaranteed Pension, Guaranteed Family Pension, Guaranteed Minimum Pension is determined on the basis of All India Consumer Price Index (AICPI-IW) applicable to industrial workers.
- The Central Government has taken a decision to pay a lump sum on the day of retirement in addition to the gratuity. It is calculated as 10th of the monthly salary (salary + DA). For this every 6 months of service will be considered as one unit. This payment has nothing to do with pension. This will not reduce the pension.
- Employees will not be burdened if they opt for the new UPS. The current 10% subscription will be payable.
- The share of the government will increase from 14.5 percent to 18 percent.
- It will cost an additional Rs.800 crore to pay the UPS dues to those who have already retired. The government will have to bear an additional Rs.6,250 crore by increasing its share.
- If the state governments join it, they will have to bear the additional burden.
There is a lot of opposition from the employees on the shared pension system. With this, a committee has been set up by the Finance Department headed by TV Somanathan, who was appointed as the Union Finance Secretary last year. It suggested that the changes to be made in NPS should be reviewed and recommendations should be made. On the other hand, in states ruled by non-BJP parties, the shared pension system was abolished and the old pension system (OPS) was implemented. In this context, the Somanathan Committee made several recommendations.
TV Somanathan said that the Unified Pension Scheme (UPS) will come into effect from April 1, 2025. It has been revealed that this will be applicable to the employees who have already retired and are going to retire by 31st March 2025. It has been explained that those who have already retired will be paid including dues.
Around 23 lakh central government employees will benefit from UPS and even state governments can also decide to join this scheme.
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