Unified Pension Scheme Union Cabinet Announcement
Announcing the decisions taken by the Cabinet, Information and Broadcasting Minister Ashwini Vaishnaw said there would be five pillars to the UPS.
Unified Pension Scheme Union Cabinet Announcement: The Union Cabinet on Saturday approved a new Unified Pension Scheme (UPS) for Central government employees which would be effective April 1, 2025.
The key features of the new pension scheme announced includes an assured pension of 50 per cent, family pension after the death of the employee, and a minimum pension for those who don’t meet the required number of service years in employment.
Unified Pension Scheme Union Cabinet Announcement: The Cabinet announcement comes more than a year after the government had announced a formation of a four-member committee under the then Finance Secretary TV Somanathan in April 2023 to review the pension system for government employees.
Unified Pension Scheme Union Cabinet Announcement: Announcing the decisions taken by the Cabinet, Information and Broadcasting Minister Ashwini Vaishnaw said there would be five pillars to the UPS. The first pillar deals with an assured amount to employees after having worked upon the demand in a methodical way and applying actuarial science making projections based on those models.
Unified Pension Scheme Union Cabinet Announcement: An assured pension of 50 per cent will be given which would be linked to the average basic pay given in the last 12 months of service before superannuation of the employee. “The qualifying service would be 25 years of service. If it’s less than 25 years but more than 10 years of service, then it would be provided on a pro-rata basis,” Vaishnaw said.
Unified Pension Scheme
| Assured Pension | 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 yearsProportionate for lesser service period up to a minimum of 10 years of service |
| Assured Family Pension | 60% of the pension of the employee immediately before her/his demise |
| Assured Minimum Pension | 10, 000 per month on superannuation after a minimum of 10 years of service |
| Inflation Indexation | On assured pension, on assured family pension and assured minimum pension Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of serving employees |
| Other features | Lump-sum payment at superannuation in addition to gratuity* 1/10th of monthly emolument (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 Union Cabinet Announcement: Pillar two under the UPS deals with assured family pension in case of death of an employee. If some employee dies, then 60 per cent of the pension given just before his or her death would be provided to the deceased employee’s family after his or her death, the minister said.
Other features of the UPS include minimum pension of Rs 10,000 to employees whose service tenure is less and sufficient amount would not be there for pension for central government employees or those associated with the existing National Pension System (NPS).
Unified Pension Scheme Union Cabinet Announcement: Also a lumpsum payment would be made to the employees at the time of superannuation in addition to gratuity. This amount would be collected every six months of service and would be 10 per cent of monthly emoluments, that is, pay and dearness allowance combined together.
Vaishnaw said this is expected to benefit 23 lakh employees and the new UPS would be optional for existing central government employees enrolled under the NPS. Additionally, he said, states can also use this UPS architecture. “If state employees also join this, then this is expected to benefit 90 crore employees,” he said.
Unified Pension Scheme Union Cabinet Announcement: Also, the government’s contribution to the pension scheme would be raised to18.5 per cent from 14 per cent. Employees’ contribution stands at 10 per cent for the existing pension scheme.
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