What Is Unified Pension Scheme?
Prime Minister Narendra Modi and the Union Cabinet have announced a new pension scheme for government employees, known as the Unified Pension Scheme (UPS). Under this scheme, employees will receive a pension equal to 50% of their average basic pay from the last 12 months of service upon retirement, ensuring their financial security. The goal of UPS is to simplify and enhance the effectiveness of the government pension system.
Key Points of the Unified Pension Scheme (UPS)
1. 50% Assured Pension:
– Upon retirement, employees will receive a pension amounting to 50% of their average basic pay from the last 12 months. This will help maintain their lifestyle and financial stability post-retirement.
2. Service Requirements:
– To qualify for the pension, employees must have completed at least 25 years of service. If the service is less than 25 years, the pension will be ₹10,000 per month.
3. Family Pension:
– In the event of the employee’s death, their family will receive 60% of the pension amount as a family pension, ensuring financial security for the family.
4. Retirees from 2004:
– The UPS will be implemented starting April 1, 2025. However, employees who retired between 2004 and March 2025 will also benefit from this scheme.
5. Government Contribution:
– The government will contribute 18.5% under this scheme to strengthen the pension fund for employees.
Five Pillars of Unified Pension Scheme
1. Assured Pension:
– 50% of the average basic pay from the last 12 months of service as pension upon retirement.
2. Family Pension:
– 60% of the pension amount will be provided to the family in case of the employee’s death.
3. Minimum Pension:
– Employees with at least 10 years of service will receive a minimum pension of ₹10,000 per month.
4. Choice of Plans:
– Employees will have the option to choose between the National Pension System (NPS) and the UPS.
5. Financial Security:
– UPS is designed to strengthen the financial security of government employees for their future.
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Impact and Cost of the Unified Pension Scheme
The Unified Pension Scheme will be implemented on April 1, 2025, with an estimated initial cost of ₹6,250 crore for its first year. The scheme will also benefit employees who retired under the NPS from 2004 onwards.
Government Consultation and Decision-Making Process
Union Minister Ashwini Vaishnaw stated that there was a demand for changes in the existing pension schemes from government employees. To address this, Prime Minister Narendra Modi constituted a committee chaired by Cabinet Secretary TV Somanathan. This committee held over 100 meetings with various organizations and states.
The minister noted that Prime Minister Modi’s approach to decision-making involves extensive consultation and discussion, unlike the opposition’s more hasty decisions. After thorough deliberations, the committee recommended the UPS, which has now been approved by the Union Cabinet.
The Unified Pension Scheme (UPS) represents a significant initiative by the Modi government to ensure financial security for government employees after retirement. By providing enhanced pension benefits, family pension provisions, and substantial government contributions, UPS aims to establish a stable and reliable pension system. This scheme will offer new hope and security to employees, playing a crucial role in safeguarding their future.