REFORMS TO STRENGTHEN UNIFIED PENSION SCHEME

0N August 24, the Union cabinet approved the Unified Pension Scheme (UPS), a significant step towards providing government employees a secure and assured pension after retirement.

- GOURAV VALLABH

The scheme, to be effective from April 1, 2025, not only brings a sense of general optimism but is also a reassurance to government employees regarding their financial security.

Over the last few years, the opposition has highlighted the dissatisfaction of government employees with the National Pension Scheme (NPS), commonly known as the New Pension Scheme. The issues primarily revolve around the uncertainty of the amount due to market fluctuations and the lack of a fixed pension, which the UPS aims to address. The UPS ensures retirees a stable, fixed pension, a crucial benefit not offered by the NPS.

The UPS has three key features. First, assured pension of 50 percent of the employee's average basic pay drawn over the last 12 months before superannuation for a minimum service of 25 years. The amount would go down for a smaller service period, up to a minimum of 10 years.

In the case of superannuation, after a minimum of 10 years of service, the UPS provides an assured minimum pension of 10,000 a month. Upon a retiree's death, their immediate family would be eligible for 60 percent of the last drawn pension.

Second, dearness relief will be available on all kinds of pensions, calculated based on the all-India Consumer Price Index for Industrial Workers, as is the case with serving employees.