Unified Pension Scheme: Who will get the benefit of this scheme, see full details here
Unified Pension Scheme: The Unified Pension Scheme (UPS) for central government workers has been approved by the Union Cabinet, which is led by Prime Minister Narendra Modi. 23 lakh workers of the federal government would benefit from the programme, which will go into effect on April 1, 2025. According to PM Modi, UPS protects the “dignity and financial security” of its workers. He wrote on X that he is proud of all public servants who put up great effort to further the nation’s growth.
Employees of the central government have a choice between UPS and NPS. In addition, existing NPS members have the option to convert to UPS. In the future, state governments may also choose to put this plan into effect. Allow us to go over this plan with you in more depth.
Integrated Pension Scheme What is it?
The government’s new Unified Pension Scheme (UPS) aims to provide government workers a steady pension based on their duration of service and final pay taken. 10% of the salary and dearness allowance (DA) will be given under the plan as a one-time payment for each six months of service, at the time of retirement.
According to Union Minister of Information and Broadcasting Ashwini Vaishnaw, the “five pillars” of UPS would be implemented in April of the next year. Additionally, Vaishnaw said that the minimum pension for those who had served for ten years would be Rs 10,000, and that the widow of a government employee who has passed away will get 60% of her husband’s pension.
“Approximately six months’ salary will be given as a lump sum on retirement after 30 years of service,” the minister said, making it clear that this payment is not the same as a gratuity.
Unified Pension Scheme: Highlights
- Objective: To provide a stable pension for central government employees.
- Effective Date: April 1, 2025.
- Eligibility: All central government employees, with an option for NPS subscribers to switch.
- Minimum Service Requirement: 10 years.
- Minimum Pension: ₹10,000 per month (with 10 years of service).
- Lump-Sum Payment on Retirement: 10% of salary and DA for every 6 months of service.
- Family Pension: 60% of the deceased employee’s pension (for the spouse).
- Service Tenure and Salary: Pension amount depends on service duration and the last drawn basic salary.
- Option to Switch from NPS: Central government employees can switch from NPS to UPS.
- Option for State Governments: State governments have the option to implement this scheme as well.
Who will benefit?
Workers in Central Government: The main target audience for UPS is workers in central government. It comprises both recently hired staff members and current staff members.
Option for NPS holders: Central government workers covered by the National Pension Scheme (NPS) at now have the option to transfer to UPS. This makes it easier for workers who want to switch from a defined benefit pension plan to one that is contribution-based.
Minimum Service Requirement: An employee must have worked with UPS for at least ten years in order to be eligible for a pension. Workers will get a minimum pension of ₹10,000 per month if they meet this requirement.
Eligibility for Family Pension: In the event of the employee’s death, his wife will be entitled to a family pension equal to 60% of his pension.
State Government workers: Although UPS was designed with central government workers in mind, state governments are also free to adopt the program for their workforce. Still, the state will decide whether or not to put it into effect.
Service duration: Under UPS, the pension amount is determined by the total number of years of service and the final basic pay received. Longer service time and better final pay will thus result in larger pensions.
National Pension Scheme What is it?
Beginning on January 1, 2004, the Central Government implemented the National Pension Scheme (NPS), a contribution-based pension scheme. A government employee participates in this program by deducting a monthly pension payment from his paycheck, and his employer matches that amount. Pension fund managers invest these monies in approved investment plans.
