Government Announces Unified Pension Scheme for Employees
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Synopsis
On January 26, the Union Finance Ministry announced the launch of the Unified Pension Scheme for Central government employees, effective April 1, providing guaranteed retirement benefits under the National Pension System.
Key Takeaways
- Unified Pension Scheme (UPS) to be operational from April 1, 2025.
- Guarantees 50% of basic pay for employees with 25+ years of service.
- Pension adjustments for those with 10-25 years of service.
- Introduced after consultations within the joint consultative machinery.
- Addresses employee requests for guaranteed retirement benefits.
New Delhi, Jan 26 (NationPress) The Union Finance Ministry has officially announced the implementation of the Unified Pension Scheme (UPS) as an alternative under the National Pension System (NPS) for Central government workers starting from April 1. This initiative aims to provide guaranteed retirement benefits for these employees.
The notification from the Finance Ministry indicates that the Unified Pension Scheme will be applicable to Central Government employees enrolled in the National Pension System who select this option.
Furthermore, it mentions, Pension Fund Regulatory and Development Authority (PFRDA) might formulate regulations to facilitate the functioning of the UPS. The effective date for the Unified Pension Scheme is set for April 1, 2025.
The new scheme, known as the Unified Pension Scheme or UPS, will guarantee 50 percent of the average basic pay accrued by a Central government employee during the 12 months preceding retirement, conditional upon the completion of 25 years of service.
For employees who have served between 10 and 25 years, pensions will be awarded on a proportionate scale.
The framework of this scheme emerged from discussions conducted within the joint consultative machinery, a platform that facilitates a dialogue between Central government employees and the government.
On August 24, 2024, the Union cabinet, chaired by Prime Minister Narendra Modi, endorsed this new pension policy, which affects approximately 2.3 million Central government employees. This policy was introduced following requests from Central government staff unions advocating for guaranteed retirement benefits and ensures 50 percent of basic pay as a monthly pension.
A high-level committee, led by cabinet secretary-designate T.V. Somanathan, the then-finance secretary, was established in April 2023 to revise the existing pension framework, known as the new pension scheme (NPS). This decision came in response to widespread complaints that escalated into a political issue, with some opposition-led states reverting to the previous old pension scheme (OPS), which had strained government finances.
Nevertheless, this populist measure was leveraged by political parties during elections in states like Himachal Pradesh.
