5 Benefits Of Unified Pension Scheme; Know Eligibility, Employee Contribution and Other Details – News18
Unified Pension Scheme Details: The Union Cabinet on August 24 delivered a significant boost to 23 lakh central government employees by approving a guaranteed pension of 50% of their salary for those who joined the service after January 1, 2004, under the National Pension System (NPS).
Addressing the longstanding demands of government employees, the Cabinet, led by Prime Minister Narendra Modi, approved the Unified Pension Scheme (UPS), which guarantees this assured pension.
Unified Pension Scheme Eligibility
Employees who choose the Unified Pension Scheme will be entitled to a guaranteed pension of 50% of the average basic pay earned during the last 12 months before retirement, provided they have a minimum qualifying service of 25 years.
For those with a shorter service period, down to a minimum of 10 years, the pension will be proportionally adjusted, according to Information and Broadcasting Minister Ashwini Vaishnaw.
5 Features Of Unified Pension Scheme In India
1. Assured pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. This pay is to be proportionate for a lesser service period upto a minimum of 10 years of service.
2. Assured family pension: @60% of the pension of the employee immediately before her/his demise.
3. Assured minimum pension: @10,000 per month on superannuation after a minimum of 10 years of service.
4. Inflation indexation: on assured pension, on assured family pension and assured minimum pension
Dearness Relief based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) as in the case of service employees
5. Lump sum payment at superannuation in addition to gratuity
1/10th of monthly emoluments (pay + DA) as on the date of superannuation for every completed six months of service
This payment will not reduce the quantum of assured pension
Unified Pension Scheme Features and Benefits; Details
The new pension scheme also guarantees an assured minimum pension of Rs 10,000 per month on superannuation after a minimum of 10 years of service.
He said this option scheme will benefit 23 lakh central government employees, adding that the number would rise to 90 lakh if state governments want to join the scheme.
Announcing other features of UPS, Vaishnaw said an assured family pension will be provided to the spouse of a deceased employee. In addition, there would be inflation indexation on assured pension, assured family pension, and assured minimum pension.
There will be Dearness Relief based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) as in the case of serving employees, the minister said.
In addition to gratuity, he said, employees at the time of retirement would be eligible for a lump sum amount — 1/10th of monthly emolument (pay + DA) as on the date of superannuation for every completed six months of service.
Scheme Date
The new scheme will be applicable from April 1, 2025.
The benefits of the Unified Pension Scheme will apply to those who are retired or retiring under the NPS till March 31, 2025. They will be eligible for arrears.
Unified Pension Scheme Employee Contribution
There would not be an additional burden on employees opting for UPS. The employee’s contribution would remain 10 %, while the government contribution would go from 14 % to 18.5%.
Expenditure for arrears would be Rs 800 crore approximately, and Rs 6,250 crore additional burden on the government for the enhanced contribution of 18%.
Unified Pension Scheme For State Government Employees
If the state government joins UPS, they would bear the additional burden for those employees for the assured pension.
Transformation of NPS
Unified Pension Scheme vs National Pension Scheme
With the addition of all these features, it marks the transformation of the National Pension System (NPS), which promised pensions based on the contribution made by employees and the government.
NPS has been implemented for all government employees except those in the armed forces joining the central government on or after January 1, 2004.
Most state/Union Territory governments have also notified NPS of their new employees.
Old Pension Scheme
Under the Old Pension Scheme (OPS), retired government employees received 50 % of their last drawn salary as monthly pensions. The amount keeps increasing with the hike in the DA rates. OPS is not fiscally sustainable as it is not contributory, and the burden on the exchequer keeps mounting.
To improve the pension system for government employees, the finance ministry last year set up a committee under Finance Secretary TV Somanathan to review the pension scheme for government employees and suggest any changes, if needed, in the light of the existing framework and structure of the National Pension System.
