A major pension reform has been announced by the Union Cabinet, which includes a guaranteed pension of 50% of the last drawn salary for government employees Under The Unified Pension Scheme.
On Saturday, the Narendra Modi government approved a policy ensuring that government employees will receive 50% of their salary as a pension under the Unified Pension Scheme.
Union Minister Ashwini Vaishnaw stated that government employees have requested modifications to the New Pension Schemes. In response, PM Modi formed a committee led by Cabinet Secretary TV Somanathan. This committee conducted over 100 meetings with various organizations and nearly all states.
PM Modi’s approach to governance differs significantly from that of the opposition. Unlike the opposition, PM Modi prioritizes extensive consultations. After thorough discussions with key stakeholders, including the Reserve Bank of India and the World Bank, the committee recommended a Unified Pension Scheme. Today, the Union Cabinet approved this scheme, and it will be implemented in the future,” the minister added.
Unified Pension Scheme 8 Things To Know :
- Guaranteed Pension: The UPS guarantees a pension of 50% of the average basic pay drawn in the last 12 months before retirement, provided the employee has completed at least 25 years of service. For those with less than 25 years but more than 10 years of service, the pension will be proportionate to the length of service.
- Assured Family Pension: In case of an employee’s death, their family will receive a pension of 60% of the pension that was being received immediately before their demise
- Assured Minimum Pension: The scheme ensures a minimum pension of Rs. 10,000 per month after completing 10 years of service.
- Inflation Indexation: The assured pension, family pension, and minimum pension will be indexed to the All India Consumer Price Index (AICPI-IW) to protect against inflation.
- Lump-sum Payment: In addition to the pension, employees will receive a lump-sum payment at retirement, calculated as 1/10th of the monthly pay plus dearness allowance for every six months of service.
- Choice Between NPS and UPS: Central government employees will have the option to choose between the National Pension Scheme (NPS) and the UPS. Existing NPS subscribers will also have the option to switch to the UPS.
- State Government Adoption: State governments will also have the option to adopt the Unified Pension Scheme.
- Effective Date: The UPS is expected to be implemented from April 1, 2025.
