Centre announces Unified Pension Scheme(UPS)

 

On Saturday, August 24, the Union Cabinet gave its approval to the Unified Pension Scheme (UPS), which will guarantee government employees' pensions after they retire. The official release states that the program will go into force on April 1, 2025.

This development coincides with a notable pushback against the New Pension Scheme (NPS) among government employees, which the Opposition has exploited for political purposes. The Old Pensions Scheme (OPS) has been reinstated in opposition-ruled states such as Himachal Pradesh (2023), Rajasthan (2022), Chhattisgarh (2022), and Punjab (2022).

Thus, the Center's introduction of a fresh pension program is a big political move ahead of the next round of Assembly elections in Jammu & Kashmir, Haryana, Maharashtra, and Jharkhand (the schedules for the latter two have not yet been declared).

Here is all you need to know about the UPS, and the context in which it is being implemented.

Crucially, the UPS promises retirees a fixed pension amount unlike the NPS. This was one of the major criticisms of the NPS by government employees.

ccording to the Union Information and Broadcasting Minister Ashwini Vaishnaw, the UPS has five key features:

Assured pension: This would amount to 50 per cent of an employee’s average basic pay, drawn over the last 12 months before superannuation for a minimum qualifying service of 25 years. The amount would proportionately go down for a lesser service period, upto a minimum of 10 years of service.

Assured minimum pension: In the case of superannuation after a minimum 10 years of service, the UPS has a provision of an assured minimum pension of Rs 10,000 per month.

Assured family pension: Upon a retiree’s death, the employee’s immediate family would be eligible for 60% of the pension last drawn by him/her.

Inflation indexation: There would be dearness relief to the above three mentioned pensions, which will be calculated based on the All India Consumer Price Index for Industrial Workers, as is the case with serving employees.

Lumpsum payment at superannuation: This would be in addition to gratuity, and be calculated as 1/10th of monthly emolument (pay+ dearness allowance) as on the date of superannuation for every six months of service completed.