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What is the New Unified Pension Scheme (UPS)?
In response to opposition to the National Pension System (NPS) and the increasing demand for the Old Pension Scheme (OPS), the central government has provided a significant benefit to its employees.
On Saturday 23 August 2024, during a meeting led by Prime Minister Narendra Modi, the Union Cabinet approved the Unified Pension Scheme (UPS). This new scheme will cover 23 lakh government employees who joined after April 1, 2004.
Employees currently registered under NPS will now have the option to switch to UPS, which guarantees 50 percent of their last basic salary as a pension.
After the meeting, Union Minister Ashwini Vaishnav stated that the Unified Pension Scheme (UPS) includes provisions for guaranteed pensions, family pensions, and a minimum assured pension.
Who is Eligible for the New Unified Pension Scheme?
Under this scheme, central government employees who have worked for 25 years will receive a pension equal to 50% of their basic salary from the last 12 months of their job.
States will also have the option to adopt this model. If they do, the total number of central and state employees covered by this scheme could reach 90 lakhs.
When to Start a New Unified Pension Scheme?
This scheme will take effect from April 1, 2025, and will cost Rs 6,250 crore to implement in the first year. Under the NPS, all employees who have retired since 2004 can choose to switch to UPS.
Prime Minister Narendra Modi stated, “We are proud of the government employees who work hard for the progress of the country. The UPS will ensure the dignity and financial security of these employees.”
The Old Pension Scheme (OPS)
OPS is a defined benefit plan Under this scheme, a government employee receives a monthly pension equal to 50% of their last drawn salary for life after retirement.
Dearness relief is provided twice a year. Employees who have completed a minimum of 10 years of service are eligible for a full pension.
The entire pension is funded by the state or central government, and no amount is deducted from the employee’s salary during their service period to contribute to this pension.
What is the National Pension System (NPS)
The National Pension System (NPS) was introduced by the government in 2004 and is a contributory scheme. In NPS, employees receive a pension after retirement by regularly depositing a fixed amount until they reach 60 years of age.
Government employees under NPS have 14% of their salary and Dearness Allowance (DA) deducted each month for the scheme, while the government contributes an additional 10%.
NPS is a market-linked scheme, with the contributions being invested in funds approved by the Pension Fund Regulatory and Development Authority (PFRDA).
Upon retirement, employees can withdraw 60% of the total accumulated amount, and the remaining 40% is used to provide them with a monthly pension.
New Unified Pension Scheme Five Pillars
The new scheme will be built on five key pillars, with one of them being that it will not place any financial burden on employees.
- Assured Pension: After completing at least 25 years of service, employees will receive a pension equal to 50% of the average basic salary from the last 12 months before retirement.
- Assured Family Pension: If the employee passes away, their family will receive 60% of the pension amount that the employee was receiving just before their death.
- Minimum Pension: After serving for a minimum of 10 years, employees will be guaranteed a monthly pension of Rs 10,000.
- Dearness Relief: Pensions will be adjusted for inflation. For current employees, the Dearness Allowance (DA) will be based on the All-India Consumer Price Index.
- Lump Sum Benefit: In addition to gratuity, a lump sum amount will be provided at retirement. This will include 1/10th of the salary and DA for every six months of completed service. Importantly, this benefit will not impose any financial burden on the employee.
Search Queries About New Unified Pension Scheme
Q. What is a unified pension scheme?
Ans. Read Above.
Q. Is UPS scheme for private employees?
Ans. No.
Q. What is unified scheme?
Ans. Read Above.
Q. Who is eligible for the new pension scheme?
Ans. Central government employees who have worked for 25 years will receive a pension.
Q. Can I get pension after 60?
Ans. Yes.
Q. Who is not eligible for pension?
Ans. Read Above.
Q. What is UPS’ unified pension scheme?
Ans. Read Above.
Q. What is UPS in pension?
Ans. Read Above.
Q. What is the difference between UPS and old pension schemes?
Ans. Read Above.
Q. What is UPS and its benefits?
Ans. Read Above.