The Union Cabinet has approved the introduction of the Unified Pension Scheme (UPS) in India, set to take effect from April 1, 2025. This new scheme aims to address the growing dissatisfaction among government employees by providing assured pensions, a minimum pension for those with at least 10 years of service, and other benefits such as inflation indexation and a lump-sum payment at retirement. The UPS, which is expected to incur an initial expenditure of ₹800 crore, is seen as a strategic move by the central government to win support ahead of upcoming assembly elections. It is considered more fiscally prudent compared to the Old Pension Scheme (OPS) due to its contributory nature.
Unified Pension Scheme (UPS): A Comprehensive Guide
Background
The pension system for government employees in India has undergone significant changes over the years. Prior to 2004, employees were covered under the Old Pension Scheme (OPS), which provided a defined benefit pension equal to 50% of last drawn salary after 33 years of service. However, in 2004, the OPS was replaced by the New Pension Scheme (NPS), a contributory system where both the government and employee contribute to a retirement savings account.
In recent years, there has been growing dissatisfaction among government employees with the NPS, leading to demands for a return to the OPS. The government has responded by introducing the Unified Pension Scheme (UPS), which aims to address these concerns.
Features of the UPS
The UPS will be a hybrid scheme that combines elements of both the OPS and NPS. Key features of the UPS include:
Implementation and Cost
The UPS is expected to be implemented from April 1, 2025. The government has estimated an initial expenditure of ₹800 crore to implement the scheme.
Top 5 FAQs
1. What is the difference between the UPS and the OPS? The UPS is a hybrid scheme that combines elements of both the OPS and NPS, while the OPS was a defined benefit pension scheme that provided a 50% of last drawn salary after 33 years of service.
2. Who is eligible for the UPS? All government employees who join service on or after April 1, 2025 will be covered under the UPS.
3. How much will I get under the UPS? Employees will be guaranteed a minimum pension equal to 50% of their last drawn salary after 33 years of service, and employees with at least 10 years of service will be eligible for a minimum pension equal to 60% of their average salary during the last 10 years of service.
4. Will my pension be inflation-indexed under the UPS? Yes, pensions under the UPS will be adjusted annually to account for inflation.
5. Can I retire early under the UPS? Yes, employees under the UPS can retire after 20 years of service. However, their pension will be reduced if they retire before 33 years of service.
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