Unified Pension Scheme 2024
Today i.e. Saturday 24-Aug’24 Central Government announces Unified Pension Scheme (UPS) after controversy over new and old pension schemes and takes U-turn on lateral entry. Government abandons NPS and returns to a pension of 50% of salary.
Union Minister Ashwini Vaishnav outlines conditions for financial benefits under UPS.
The Union Cabinet approved a new Unified Pension Scheme for Central government employees effective 1st April’25. It includes a guaranteed 50% pension, family pension, and a minimum pension for those with inadequate service years.
In Short
- Unified Pension Scheme 2024
- Acceptance of the UPS
- When did the Pension Reformation begin?
- When will this be implemented
- Who’ll get the benefits ?
- Benefit ratio?
- Center’s contribution percentage and benefits to the employees?
- Arrears to be calculated and paid
- Top 5 Objectives of UPS
UPS; Unified Pension Scheme 2024 | Acceptance
Union Minister Ashwini Vaishnav announced Cabinet approval for the Unified Pension Scheme (UPS).
Government employees, serving citizens nationwide in sectors like railways, police, postal, and medical services, play a vital role in society.
The decision aims to address social security concerns and ensure the well-being of government employees, reflecting the government’s commitment to their welfare.
When did the Pension Reformation begin?
In April 2023, a committee chaired by Dr. Somanathan was formed to improve the New Pension Scheme (NPS). Over a hundred employee organizations were consulted, along with the Reserve Bank, Finance Secretaries, political leaders and employee unions.
The committee recommended the Integrated Pension Scheme, which has been approved by the Cabinet to enhance social security for retired government.
When will this be implemented
The Unified Pension Scheme 2024 or UPS scheme will be implemented from 1st-April’25 according to the government announcement.
Guaranteed | Unified Pension Scheme
| Features | Description |
| Guaranteed Pension |
For a minimum of 25 years of eligible service, 50% of the average basic salary drawn during the final 12 months before retirement. Corresponding to a shorter service duration, up to a minimum of ten years of service |
| Guaranteed Family Pension | 60% of the employee pension in the final moments before death |
| Guaranteed Minimum Pension | 10, 000 monthly retirement payment following a minimum of ten years of employment |
| Indexation of Inflation | Guaranteed minimum pension, guaranteed family pension, and guaranteed pension as in the case of service employees, dearness relief based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) |
| Other features |
A one-time payment at retirement plus a gratuity (1). For every six months of service completed, one-tenth of the monthly emolument (pay + DA) as on the date of retirement (2). The amount of the promised pension will not be decreased by this contribution. |
Who’ll get the benefits ?
23 lakh central government employees can choose between NPS and UPS schemes. State governments can also opt for the scheme. If state government employees join, a total of 90 lakh employees will benefit from it.
Benefit ratio?
Finance Secretary Dr. TV Somanathan announced that employees retiring from 2004 onwards until March 31, 2025, can benefit from the UPS scheme, receiving arrears with adjustments. Rs 800 crore allocated for arrears with full funding. Rs 6250 crore annually set aside to cover increased pension contribution burden by the Center.
Center’s contribution percentage and benifits to the employees?
The increase in government contribution has relieved employees from financial burden. Previously, both parties contributed 10%, now government contributes 14% and will increase to 18.5% in April 2025. This change marks significant progress in employee benefits.
Arrears to be calculated and paid
Finance Secretary Dr. TV Somanathan noted that 20 years have passed since 2004, with fewer employees retiring under NPS. Complete records are available on their service entry, retirement, and received funds. Those opting for UPS will receive arrears with interest.
Top 5 Objectives of UPS
(i). 50% assured pension:
Pension will be assured with the implementation of UPS. Its amount will be equal to half of the average 12-month basic wage before retirement.
This sum is only payable for up to 25 years of service. Pensions will be paid out corresponding to service duration, with less than 25 years and more than 10 years being eligible.
(ii). Family pension
60% of the entire pension sum will be awarded to the employee’s family before to his or her death.
(iii). Minimum Pension
An assured minimum pension of Rs. 10,000 per month will be granted after at least ten years of service. This sum, with dearness allowance, would be around Rs. 15,000 as of today.
(iv). Indexation with inflation rate
Dearness Relief shall be the basis for inflation adjustment in the cases of all three categories of pensions: assured, family, and minimum (DR).
(v). One-time payment in addition to gratuity on retirement
10% of the total (Salary + DA) will be paid in one single sum after six months of service. That for example, a person will get a lump sum payment (emolument) based on six months of service if they had worked for thirty years.
Press Information Bureau : UPS | Unified Pension Scheme
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