Chaired by PM Narendra Modi, the Union Cabinet approved the The Unified Pension Scheme (UPS) on August 24, 2024. Here we will talk all about UPS – What is it? What are the features and benefits of UPS.
What is Unified Pension Scheme?
UPS is a comprehensive initiative designed to enhance retirement security for government employees in India. With provisions for lump-sum payments, family pensions, and the inclusion of past retirees, the UPS aims to provide a stable and secure retirement for millions of central and state government employees.
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The Benefits of UPS in India
1.Assured Pension Scheme
– Eligible retirees will receive a pension equivalent to 50% of their average basic pay over the last 12 months before retirement.
– To qualify, retirees must have completed a minimum of 25 years of service.
– For those with a shorter service period, the pension will be proportionally reduced, with a minimum requirement of 10 years of service.
2. Government Contribution Enhancement
- Increase in Government Contribution: From 14% to 18.5%
- No Change in Employee Contribution: Employee contribution remains unchanged
- Benefit to Employees: Increased government contribution will result in higher pension benefits for employees without any additional financial burden on them.
3. Assured Family Pension
- Benefit in Case of Demise: In the event of a pensioner’s unfortunate demise
- Family Pension Amount: 60% of the pension amount the employee was receiving
- Purpose: Ensures continued financial support for the family, providing a safety net during difficult times.
4. Assured Minimum Pension
- Guaranteed Pension Amount: ₹10,000 per month
- Eligibility: Employees who have completed a minimum of 10 years of service
- Benefit: Ensures a minimum pension amount, providing a financial safety net for retirees
- Superannuation Benefit: Payable upon superannuation (retirement) after meeting the eligibility criteria.
5. Inflation Protection
- Indexing to Inflation: Pensions will be adjusted to keep pace with inflation
- Dearness Relief (DR): DR will be calculated based on the All India Consumer Price Index for Industrial Workers (AICPI-IW)
- Same as Serving Employees: DR calculation will be same as for serving employees
- Purpose: Ensures pensioners’ purchasing power is protected against inflation, maintaining their standard of living.
6. Superannuation Benefit:
- Lump-Sum Payment: Receive a lump-sum amount upon retirement, in addition to gratuity.
- Calculation: 1/10th of monthly emoluments (pay + DA) on the date of superannuation, multiplied by the number of completed six-month periods of service.
- No Reduction in Pension: This lump-sum payment will not reduce the assured pension amount.
7. Retrospective Benefits for Past Retirees
- Coverage: Provisions of the Universal Pension Scheme (UPS) will apply to past retirees of the National Pension System (NPS) who have already superannuated.
- Arrears Payment: Arrears for the past period will be paid to eligible retirees.
- Interest Payment: Interest will be paid on arrears at the rates applicable to the Public Provident Fund (PPF).
8. Universal Pension Scheme (UPS) Options
- Voluntary Participation: UPS will be available as an optional scheme for employees.
- Eligibility: The following categories of employees can opt for UPS:
- Existing NPS subscribers
- Existing VRS (Voluntary Retirement Scheme) recipients with NPS
- Future employees
- Irrevocable Choice: Once an employee exercises the option to join UPS, it will be a final decision and cannot be changed later.
9. Implementation of Universal Pension Scheme (UPS)
- Implemented by: Central Government
- Number of Beneficiaries: Approximately 23 lakh Central Government employees will benefit from UPS
- Scope: A significant pension reform impacting a large workforce, aimed at providing a more secure retirement financial future.
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10 Expansion of Universal Pension Scheme (UPS) to State Governments
- Architecture Design: Same architecture as Central Government’s UPS, designed for adoption by State Governments
- Potential Beneficiaries: Over 90 lakh Government employees currently under NPS can benefit if State Governments adopt UPS
- Scope of Expansion: A massive pension reform impact, covering a large workforce across India, providing a more secure retirement financial future.
This article is from Ashwini Vasihnav Thread on X.
