Govt approves Unified Pension Scheme, to benefit 23 Lakh employees

The union cabinet chaired by Prime Minister Narendra Modi on Aug 24 approved the Unified Pension Scheme (UPS) amid protests by several non-BJP-ruled states over the New Pension Scheme (NPS).

"This scheme will benefit 23 lakh central government employees (under the National Pension Scheme)," announced Union Information and Broadcasting Minister Ashwini Vaishnaw.

The new scheme is said to be implemented from April 1, 2025, and employees will have the option to choose between the NPS or UPS.

In 2023, a committee headed by Finance Secretary TV Somanathan was formed to review the pension scheme for government employees. The committee was supposed to suggest changes according to the existing framework and structure of the National Pension System.

The committee was formed after several non-BJP-ruled states decided to return to the Old Pension Scheme (OPS) with many employees calling for the same at various organizations.

As per the OPS, retired government employees received 50% of their last-drawn salary as monthly pensions. The amount adjusts itself with an increase in the Dearness Allowance (DA) rates.

Among the key features of the new scheme include:

1. Assured pension: The scheme assures 50% of the average basic pay drawn over the last 12 months before retirement for a minimum qualifying service of 25 years. The pay will be proportionate for a lesser service period up to a minimum of 10 years of service.

2. Assured family pension: This is applicable in case of employee's death where 60% of the last-drawn amount by the pensioner will be given to the family.

3. Assured minimum pension: This scheme will provide ₹10,000 per month after retirement for government employees after a minimum of 10 years of service.

As per the current pension scheme, employees contribute 10% while the central government contributes 14%, which would be increased to 18.5% with the UPS.

"Some central employees met with the Prime Minister today. They were with the UPS in the meeting," said the Union Information and Broadcasting minister.

PM Modi said the government is “proud of the hard work of all government employees who contribute significantly to national progress.”

"The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future," he added.