Government Seeks Rs 7,000 Crore For Unified Pension Scheme—All About UPS
The scheme was introduced last August, following repeated concerns raised by government employees over the National Pension System (NPS).
Finance Minister Nirmala Sitharaman on Monday tabled the second batch of supplementary demands for grants for fiscal year 2024-25. The Centre is seeking Rs 51,463 crore, covering 52 grants and three appropriations. The government has asked Parliament to approve an additional expenditure of Rs 6.79 lakh crore in gross terms, with a net cash outgo of Rs 51,462.86 crore.
The net amount sought by the government includes Rs 7,000 crore for the Unified Pension Scheme (UPS), which is set to be applicable from April 1.
What Is The Unified Pension Scheme?
The scheme was introduced last August, following repeated concerns raised by government employees over the National Pension System (NPS), which came into effect from January 1, 2004. Under this scheme, the government is offering central government employees an option within the NPS to receive an assured payout after retirement.
Under UPS, employees have to contribute 10% of their basic salary and dearness allowance. Meanwhile, the employer will contribute 18.5%.
How Does The Unified Pension Scheme Work?
The UPS is a fund-based payout system, relying on the timely accumulation and investment of contributions from both the employee and the employer (the Central government). These contributions will fund monthly payouts to retirees. The scheme is only available to the current subscribers of NPS, including retired central government employees.
Under this, employees are assured a pension of 50% of their average basic pay over the last 12 months before retirement. To be eligible, the employee should have completed 25 years of service. This is in contrast to the market returns-linked payouts under the NPS.
What Happens If The Qualifying Service Period Is Less Than 25 Years?
In case the employee has served less than 25 years, a proportionate payout will be provided.
In case of at least 10 years of service, the employee is assured of a minimum guaranteed payout of Rs 10,000 per month. This is after ensuring that contributions were regular and there were no withdrawals.
For those seeking voluntary return after a minimum 25 years of service, the assured payout will begin from the date the employee would have superannuated (had they continued to work).
The scheme is targeted at 2.3 million government employees and those opting for UPS will not be able to switch later.
