The Indian Union Cabinet has approved an assured 50 per cent pension for government employees who joined service under the National Pension System (NPS). The decision was made in order to bridge the gap between the earlier defined benefit pension scheme and the contribution-based NPS. The newly announced Unified Pension Scheme (UPS) will provide government employees with 50 per cent of their average basic pay as pension for at least 25 years of service, and proportionately for a shorter period. This move is expected to benefit over 23 lakh government employees and will go into effect from the next financial year.
Government Announces Assured Pension Scheme for NPS Employees
The Indian Union Cabinet has approved a significant move to provide an assured 50% pension to government employees who joined service under the National Pension System (NPS). This decision aims to address the disparity between the earlier defined benefit pension scheme and the contribution-based NPS.
Background:
The NPS was introduced in 2004 as a contributory pension scheme for government employees who joined service on or after January 1, 2004. The scheme requires employees to contribute 10% of their monthly basic pay to their individual pension accounts. Upon retirement, the accumulated corpus is invested in an annuity plan, which provides a monthly pension for life.
However, there have been concerns among NPS employees that their pension may not be sufficient due to unpredictable market returns. This has led to demands for an assured minimum pension.
The Unified Pension Scheme (UPS):
To bridge this gap, the government has announced the UPS, which will provide a guaranteed 50% of the average basic pay as pension for at least 25 years of service. The pension will be proportionate for a shorter period of service.
Benefits of the UPS:
Top 5 FAQs and Answers:
1. Who is eligible for the UPS?
2. How long will I receive the pension under the UPS?
3. What happens if the accumulated corpus in the NPS account is less than the guaranteed pension?
4. Will the UPS affect my existing NPS account?
5. When will the UPS come into effect?
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