Now, Central government employees can enjoy an assured pension of 50 percent of their basic salary post-retirement, thanks to the approval given to the Unified Pension Scheme by the Union Cabinet. The scheme incorporates the best of the new and old pension schemes (NPS and OPS) and will come into effect from April 1, 2025.
The new pension scheme or NPS was not approved by many state governments. In fact, Himachal Pradesh, Rajasthan, Chhattisgarh, and Punjab have already restored the OPS.
The latest unified pension scheme or UPS will benefit 23 lakh Central government employees – all those who have completed at least 10 years of service, in which case they are guaranteed a minimum pension of Rs 10,000 per month. The full benefits of the scheme, however, will only apply to those who have completed at least 25 years of service.
For those already covered under the NPS, or those opting for voluntary retirement scheme (VRS) under NPS, the UPS is optional. New employees also have the option to choose to join the UPS. Once the option is chosen, it cannot be changed or withdrawn.
Under the scheme, retired employees shall enjoy 50 percent of their average basic pay over the last 12 months before retirement as a pension.
The government’s contribution to the pension fund will go up from 14 percent to 18.5 percent, while the employee’s contribution will see no change.
In the case of the demise of a pensioner, their family will be entitled to 60 percent of the pension that they were receiving.
Additionally, the pension will be indexed to inflation. The dearness allowance or DA will be based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), which will help the pensioners tackle the increasing cost of living.
On retirement, the employees will be given a lumpsum amount along with gratuity. This amount will be equal to a tenth of the monthly salary, including pay and DA, as on the date of retirement for every six months of completed service. This amount will not affect the assured pension amount in any way.
Those who have already retired under the NPS will also be covered under the scheme. They will, in fact, be paid arrears for the past period, with interest being determined as per the rates of Public Provident Fund (PPF).
The UPS can be easily adopted by state governments as well. If all states adopt the same, around 90 lakh government employees will benefit from the same all over India.
