Source: DD News
Context: The finance ministry has notified the operationalization of the Unified Pension Scheme (UPS) as an option under the National Pension System (NPS) for central government employees, effective from April 1 of 2025.
About Unified Pension Scheme (UPS):
- What is it?
- The Unified Pension Scheme (UPS) is a contributory pension scheme offering government employees guaranteed retirement benefits, including 50% of their last drawn basic pay as a monthly pension.
- Ministry: Introduced by the Ministry of Finance, it will be regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
- Launched in: The UPS was approved by the Cabinet on August 24, 2024, and will be operational from April 1, 2025.
- Aim: The scheme aims to address employee grievances regarding the market-linked returns of the NPS by providing guaranteed benefits and ensuring financial security post-retirement.
- Key Features:
- Guaranteed Pension: Employees will receive 50% of their average basic pay during the last 12 months before retirement.
- Dearness Relief: Regular hikes to adjust pensions based on inflation trends.
- Family Pension: In case of death, family members will receive 60% of the employee’s pension.
- Superannuation Benefits: A lump sum payout alongside gratuity at retirement.
- Minimum Pension: A minimum of ₹10,000 per month for employees completing at least 10 years of service.
- Contributions Under the Scheme:
- Employees contribute 10% of their basic pay.
- The government contributes 5% of the basic pay, which can be revised based on actuarial reviews to ensure sustainability.
- Coverage:
- Applicable to Central Government employees who were previously covered under the NPS.
- Employees hired on or after January 1, 2004, including retirees, can opt to switch from NPS to UPS.
- Transition from NPS to UPS:
- The NPS linked pensions to market-driven returns based on contributions, causing concerns over uncertainty.
- The UPS eliminates these concerns by guaranteeing lifelong monthly pensions, making it beneficial for an estimated 99% of NPS members.
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