Cabinet Decisions: In a major decision, Prime Minister Narendra Modi-led Cabinet on Saturday (August 24) approved the Unified Pension Scheme (UPS) for government employees, providing assured minimum pension and family pension. The significant move aims to provide assured pension, family pension and assured minimum pension to the central and state government employees. Union Minister Ashwini Vaishnaw shared the information during the media briefing after the Cabinet meeting. He said that the Centre constituted a committee which held over 100 meetings with several top organisations, including the RBI and World Bank.
Based on the recommendation of the committee, the UPS was approved in the Cabinet meeting on Saturday.
Unified Pension Scheme to benefit 23 lakh government employees
Around 23 lakh government employees of the central government would benefit from the UPS, the Minister said, adding that they will have the option to choose between the New Pension Scheme and UPS.
"Today the Union Cabinet has approved Unified Pension Scheme (UPS) for government employees providing for the assured pension...50% assured pension is the first pillar of the scheme...second pillar will be assured family pension...About 23 lakh employees of the central government would benefit from the Unified Pension Scheme (UPS)...There will be an option for the employees to opt between NPS and UPS," he said.
Unified Pension Scheme approved after consultations with RBI and World Bank
"Government employees have demanded some changes in the National Pension Schemes. For this, PM Modi constituted a committee under the chairmanship of Cabinet Secretary TV Somanathan. This committee held more than 100 meetings with different organisations and nearly all the states. There's a difference between how PM Modi works and the oppositions works. Unlike the opposition, PM Modi believes in holding extensive consultations. Following extensions consultations with everyone, including Reserve Bank of India and World Bank, the committee has recommended a Unified Pension Scheme. Today, the Union Cabinet has approved this Unified Pension Scheme, and it will be implemented in the future," he said.
Options for the central and state government employees
According to the Centre, the central government employees will have the option to decide whether they want to stay in the National Pension Scheme (NPS) or join the Unified Pension Scheme. The state government employees can also go for the new UPS. "If also adopted by State Governments, it can benefit over 90 lakh Government employees who are presently on NPS," the government said.
UPS will be applicable from April 1, 2025. The cost of the implementation of the scheme will be Rs 6,250 crore in the first year. UPS will apply to all those who have retired under the NPS from 2004.
- Provisions of UPS will apply to past retirees of NPS (who have already superannuated).
- Arrears for past period will be paid with interest at PPF rates.
- UPS will be available as an option to the employees. Existing as well as future employees will have an option of joining NPS or UPS. Choice, once exercised, will be final.
- Employee contribution will not increase. Government will provide additional contribution for implementing UPS.
- Government contribution has been increased from 14 to 18.5%.
Key highlights of Unified Pension Scheme
- Assured Pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. Proportionate for lesser service period upto a minimum of 10 years of service.
- Assured Family Pension: at 60% of pension of the employee immediately before her/his demise.
- Assured Minimum Pension: at Rs 10,000 per month on superannuation after minimum 10 years of service.
- Lump-Sum payment at superannuation in addition to gratuity. 1/10th of monthly emolument (pay + DA) as on the date of superannuation for every completed six months of service. This payment will not reduce the quantum of assured pension.
PM Modi reacts to Cabinet decision on UPS
PM Modi took to X and said that the UPS ensures "dignity and financial security for government employees".
"We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future," he said.
