Unified Pension Scheme Rules Expected by October 15: Key Details on the Upcoming UPS Rollout
The Unified Pension Scheme (UPS) will benefit 2.3 million central government employees. Learn about key features, eligibility, and the rollout scheduled for April 2025.
Unified Pension Scheme Rules Expected by October 15
Unified Pension Scheme: Government Expected to Announce Rules by October 15, Rollout Set for April 2025
The Central government is preparing to roll out the Unified Provident Scheme (UPS) for its employees, with official rules anticipated to be released by October 15, 2024. This newly introduced scheme, which will benefit an estimated 2.3 million central government employees, aims to offer more flexible retirement options compared to the existing National Pension System (NPS). While participation in the NPS is mandatory, the UPS will be optional for employees.
Set to become operational on April 1, 2025, the implementation is being coordinated under Cabinet Secretary TV Somanathan. Key departments involved include the Department of Personnel & Training, which will gauge employee interest, and the Department of Administration Reforms and Personnel Grievances, responsible for drafting the regulations. The Pension Fund Regulatory and Development Authority (PFRDA) will oversee the scheme's investment components, while the Department for Pension and Pensioners’ Welfare and the National Securities Depository Ltd (NSDL) are working together to finalize the operational framework.
Overview of the Unified Pension Scheme (UPS)
The UPS blends features from both the Old Pension Scheme (OPS) and the New Pension Scheme (NPS). Like the NPS, it is a contributory system requiring employees to contribute 10% of their salary towards their pension. Employers will contribute 18.5%. A notable feature of the UPS is its guaranteed pension, reminiscent of the OPS, offering financial security in retirement.
Upon retiring, employees will receive a guaranteed pension, gratuity, and a lump sum. Those with 25 years or more of service will be eligible for a pension equivalent to 50% of their average salary over the last 12 months of service. For employees with 10 to 25 years of service, the pension will be proportional to their length of service. Importantly, every retiree is assured of a minimum monthly pension of ₹10,000. The lump sum is calculated based on 1/10th of the salary for every six months of service. Additionally, there is a provision for a guaranteed family pension set at 60% of the employee’s pension.
Key Features of UPS
- Guaranteed Pension: Employees who complete 25 years of service will receive a pension amounting to 50% of their average basic pay over the last 12 months of service. For those with less than 25 years but more than 10 years of service, the pension will be proportional to their tenure.
- Guaranteed Family Pension: In the event of an employee's death, their family will receive 60% of the pension they would have received.
- Minimum Pension: All eligible retirees will receive a minimum of ₹10,000 per month, provided they have served for at least 10 years.
- Inflation Adjustment: The pension, family pension, and minimum pension will be adjusted to account for inflation, following the All India Consumer Price Index for Industrial Workers (AICPI-IW).
- Dearness Relief: Similar to other central government employees, pensioners will be eligible for dearness relief, linked to the AICPI-IW.
- Lump Sum Payment: In addition to the pension and gratuity, employees will receive a lump sum at retirement, calculated at 1/10th of their salary for every six months of service.
The UPS promises a blend of flexibility, security, and benefits for central government employees, ensuring a more stable post-retirement financial future. With rules expected by mid-October and the official rollout in April 2025, this scheme marks a significant development in government pension policy.
