TheUnifiedPensionScheme (UPS) is a newly sanctioned pension program for government employees inIndia that provides certain pension benefits. It enables employees to receive a fixed amount as a pension based on their previous salary hence being more reliable than the market drivenNationalPensionScheme(NPS).
Employee Contribution: The employee does not contribute any part of his earnings under UPS while NPS requires 10%of his basic pay + DA. Government Contribution: The government's total contribution for UPS stands at18.5% compared to14% for NPS.
Pension: A guaranteed pension amounting=50% of his average basic salary over a period of12 months is paid by UPS but there is no fixed pension offered by NPS since it is market based funded. Family Pension and Inflation Indexation: In addition, according to UPS, better family pensions as well as indexing to inflation are more relevant than what is provided under NPS
The UPS is available to the employees of the central government. The scheme is optional, so an employee may choose between the UPS or NPS. Existing NPS subscribers have the option to switch over to UPS.
Implementation of the UPS starts on 1st April 2025.
A UPS pension is equivalent to 50% of average basic pay received in the last 12 months prior retirement provided that a worker has a minimum 25 years’ service. For employees who have less than 25 years but more than 10 years of service, it will be calculated proportionately. The minimum assured pension will be Rs 10,000 per month adjusted with inflation.
In case an employee dies, his or her family will get 60% of the amount of pension he or she was entitled to before death. This guarantees ongoing financial support for the family.
Pensions, family pensions and minimum assured pensions provided under UPS are index-linked to inflation through All India Consumer Price Index for Industrial Workers (AICPI-W). It retains its value over time thus shielding against escalating costs.
Yes, apart from regular monthly pension, retired employees will also get lump-sums that are equivalent to 1/10th of their last drawn salaries (i.e., basic + DA) for every six months of service at retirement date. Such payment does not interfere with pension amounts.
Initial expenditure to implement UPS is Rs 800 crore as reported by the government. Costs will increase annually on UPS by Rs 6250 crore from the first year after implementation.
Yes, state governments can opt for UPS for their employees; if they do so, then around 90 lakh beneficiaries would increase.
The employees presently enrolled in NPS have the option of switching to Unified Pension Scheme (UPS) if they want.