THE rollout of a mega deal – Unified Pension Scheme (UPS) – by the Modi Government is set to benefit about 23 lakh Central Government employees in the country.
This new scheme that comes into effect from April 1, 2025 will also be available on an optional basis to state governments for their employees, I&B Minister Ashwini Vaishnaw told the media after the Cabinet meeting in New Delhi on August 24.
Explaining the features of the new, TV Somanathan, Cabinet Secretary-Designate, who was head of the Governmentappointed panel that reviewed NPS for the Government sector, said the UPS has five major benefits – assured pension; assured family pension; assured minimum pension; inflation indexation and lumpsum payment at superannuation in addition to gratuity and all-in-one comprehensive package.
Fully-funded scheme
Somanathan highlighted one of the important attribute of the UPS is that it would be a fully funded contributory scheme. “UPS is fiscally more prudent. It remains in the same architecture of a contributory funded scheme. This is critical difference between erstwhile Old pension scheme and the new UPS. OPS was unfunded non-contributory scheme, while UPS is a funded contributory scheme.
“The only difference in the changes made today is we are giving an assurance and not leave things to vagaries of market forces. Otherwise structure of UPS has best elements of both (OPS and NPS),” Somanathan said. The UPS will also apply to all those Government employees who have already retired under the National Pension System (NPS) from 2004 onwards.
Eligibility for scheme
“Though new UPS will take effect from April 1, 2025, everybody who has retired from the time of inception of NPS and also including those retiring till March 31, 2025 will also be eligible for all five benefits under UPS. They will get arrears after adjusting for whatever they have drawn.
Arrears will be paid with interest at PPF rates”, Somanathan reportedly said.
The CS-Designate noted that as many as 23 lakh Central Government employees can benefit from the UPS. Its rollout will entail an additional outgo of Rs 6,250 crore for the Centre in the first year and arrears of Rs 800 crore.
He said as many as 90 lakh state Government employees can potentially benefit from the UPS if the states decide to switch from NPS to UPS.
The implementation of the UPS would mean Centre’s contribution to the scheme would go up from 14 per cent (in current NPS) to 18.5 per cent per month, he said. The employees’ contribution will not increase, he stressed.
