Unified Pension Scheme: An Overview of Modi's Latest Political Move

Unified Pension Scheme: A Shift in Political Strategy

Did the BJP succumb to the pressure of five non-BJP ruled states that reintroduced the Old Pension Scheme, scrapped by the Atal Bihari Vajpayee government in 2004? After getting drubbed in the recently-held general election, it seems to adopt the path of populist politics.

Impact on Central Government Employees

About 23 lakh central government employees will benefit from the Unified Pension Scheme. Under this scheme, a retired government employee will receive an average of 50% of their basic salary from the last 12 months prior to retirement. Those with at least 25 years of service will qualify, while others will receive a minimum of Rs 10,000 if they served at least 10 years.

Protection Against Inflation

The scheme also assures protection against inflation with adjustments according to the All India Consumer Price Index for Industrial Workers. Furthermore, a lump sum equivalent to 10% of the basic salary will be provided immediately after retirement.

Unified vs New Pension Scheme

The Unified Pension Scheme deviates from the self-financed New Pension Scheme, which relied on the stock market. Under the NPS, employees contribute part of their salary with variable risks and returns.

Financial Implications for the Government

This new implementation brings additional financial burdens for the union government, projected at Rs 6,250 crore in the first year, along with an Rs 800 crore liability for clearing dues for retirees.

Political Context and Future Prospects

The BJP's decision sparks debate on its commitment to ongoing reforms versus a return to populism in response to electoral pressure. As the political landscape shifts, the implications of the Unified Pension Scheme may resonate deeply within coming assembly elections.