The Central Government launched the Unified Pension Scheme (UPS) on August 24, 2024, with implementation starting from April 1, 2025. This scheme is set to benefit 23 lakh Central Government employees. Below is a detailed overview of the UPS, including its features and benefits.
What is the Unified Pension Scheme?
The Unified Pension Scheme (UPS) was introduced to ensure stability, financial security, and dignity for government employees after retirement. It offers a guaranteed pension, enhancing the post-retirement benefits for employees. Currently, government employees are under the National Pension System (NPS), and they have the choice to remain with NPS or switch to UPS. However, switching to UPS is irreversible.
State governments can also adopt the UPS for their employees. Maharashtra became the first state to implement the scheme, with the Maharashtra cabinet approving it on August 25, 2024. If all states adopt UPS, it could benefit over 90 lakh employees currently under NPS across India.
UPS vs NPS vs OPS: Which One is Right for You?
Unified Pension Scheme Details:
- Scheme Name: Unified Pension Scheme (UPS)
- Announced on: August 24, 2024
- Implementation Date: April 1, 2025
- Beneficiaries: Central Government employees
- Employee Contribution: 10% of basic salary + dearness allowance (DA)
- Employer Contribution: 18.5% of basic salary + DA
Benefits of UPS:
- Pension: Employees with at least 25 years of service will receive 50% of their average basic pay over the last 12 months as a pension.
- Minimum Pension: A fixed pension of ₹10,000 per month for employees with at least 10 years of service.
- Family Pension: In case of the pensioner’s death, 60% of the pension will be provided to the spouse.
- Lump Sum Payment: At the time of superannuation, retirees will receive a lump sum equal to 1/10th of the last monthly emoluments for every six months of completed service.
- Inflation Protection: Pension amounts are adjusted based on inflation using the All India Consumer Price Index for Industrial Workers (AICPI-IW).
Eligibility for UPS:
- Government employees with at least 10 years of service are eligible for a fixed pension.
- Employees with 25 years of service can receive 50% of their average basic pay as a pension.
- Those under NPS or opting for the Voluntary Retirement Scheme (VRS) are also eligible.
UPS vs. NPS:
| Particulars | UPS | NPS |
|---|---|---|
| Employer Contribution | 18.5% of basic salary + DA | 14% of basic salary + DA |
| Pension Amount | 50% of average basic pay (last 12 months) | Varies based on investment returns |
| Family Pension | 60% of pension at time of death | Based on accumulated corpus and annuity plan |
| Minimum Pension | ₹10,000 per month | Varies based on market investments |
| Lump Sum Amount | Provided along with gratuity | Can withdraw up to 60% of NPS corpus |
| Inflation Protection | Adjusted based on AICPI-IW | No provision for automatic DA increments |
Related Articles:
- UPS vs. NPS vs. OPS: Which is better for you?
FAQs:
When will the UPS come into effect?
April 1, 2025.Is the UPS available for private employees?
No, it is currently only for government employees.Does the UPS offer a lump sum pension?
Yes, a lump sum is provided upon retirement without reducing the assured pension.
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