Centre Announces New Unified Pension Scheme For Central Government Employees; Check Out Salient Features

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• Aug 24, 2024 | Guriya Khatun

Employees with a minimum of 25 years of service will receive a pension equal to 50 percent of their average basic salary for the last 12 months before retirement.

Digital Desk: In a significant move ahead of assembly elections in a state and a Union Territory this year, the government has introduced the Union Pension Scheme (UPS) amidst protests from several non-BJP-ruled states regarding the New Pension Scheme (NPS). Union Information and Broadcasting Minister Ashwini Vaishnaw announced that the UPS will benefit 23 lakh central government employees currently under the NPS.

The new scheme, set to take effect from April 1, 2025, will allow employees to choose between the NPS and the UPS.

Approved by the Union Cabinet under Prime Minister Narendra Modi, the UPS offers several benefits to government employees:

1.      Assured Pension: Employees with a minimum of 25 years of service will receive a pension equal to 50 percent of their average basic salary for the last 12 months before retirement. For those with shorter service, the pension will be proportionate, with a minimum requirement of 10 years of service.

2.      Assured Family Pension: In the event of the pensioner's death, their family will receive 60 percent of the last-drawn pension amount.

3.      Assured Minimum Pension: The scheme guarantees a minimum pension of ₹10,000 per month for employees who retire after at least 10 years of service.

Currently, under the existing pension scheme, employees contribute 10 percent, and the central government contributes 14 percent. With the introduction of the UPS, the central government’s contribution will increase to 18 percent.

Mr. Vaishnaw noted that some central employees discussed the UPS with the Prime Minister, expressing their support for the new scheme during the meeting.

Last year, a committee led by Finance Secretary TV Somanathan was established to review the pension system for government employees and propose modifications to the National Pension System. This move came after several non-BJP-ruled states chose to revert to the Old Pension Scheme (OPS) and in response to demands from employee organizations.

Under the OPS, retired government employees received 50 percent of their last-drawn salary as a monthly pension, with adjustments based on increases in Dearness Allowance (DA).