Unified Pension Scheme Offers Guaranteed Benefits to Central Government Employees

Pension Scheme Overview

The Centre has announced a new guaranteed pension scheme for its employees, which will ensure an assured amount of half their average basic salary drawn over the 12 months preceding superannuation for those completing at least 25 years of service.

Key Features of the Unified Pension Scheme

The Unified Pension Scheme (UPS) consists of five main pillars and aims to benefit 2.3 million central government employees. According to information and broadcasting minister Ashwini Vaishnaw, this move is an effort to resolve ongoing debates surrounding the old pension scheme (OPS), which has been revived in several opposition-ruled states.

With a planned start date of April 1, 2025, the new UPS will grant a minimum pension of ₹10,000 a month, adjusted for inflation.

Funding and Benefits

• The UPS will be fully funded each year from the budget, reducing long-term financial burdens.
• Upon passing, families receive 60% of the last pension amount.
• Employees with 10-25 years of service will benefit proportionately.

Comparative Analysis with National Pension System

The current National Pension System (NPS), launched on January 1, 2004, offers a defined contribution. Employees can opt to transition to UPS for better guaranteed benefits.

Government Contribution Adjustments

The government plans to increase its contribution from 14% to 18.5% of the salary to ensure the scheme's sustainability, with employees continuing to contribute 10%.

With an estimated expenditure of ₹800 crore on arrears and ₹6,250 crore needed in the first year, this initiative has garnered significant governmental support.

Conclusion on Public Sentiment

With 99% of cases demonstrating better outcomes under UPS compared to NPS, many are expected to transition for increased assured benefits, providing long-term financial stability to pensioners in India.