Union Cabinet approves assured 50 per cent of salary as pension for govt employees under Unified Pension Scheme.
New Delhi: The Central Government has announced the introduction of the Unified Pension Scheme (UPS), set to take effect from April 1, 2025. Union Information and Broadcasting Minister Ashwini Vaishnaw revealed the details of the scheme on Saturday, stating that the decision was approved during a Union Cabinet meeting chaired by Prime Minister Narendra Modi.
The UPS is expected to benefit approximately 2.3 million central government employees, who will have the option to choose between the new UPS and the existing National Pension Scheme (NPS). State governments are also invited to adopt the scheme, which could extend benefits to nearly 9 million additional employees if implemented at the state level.
Prior to the cabinet meeting, Prime Minister Modi conducted extensive discussions with leaders of central government employees' organizations—the first such meeting in a decade. The talks covered various topics, including the comparison between the new and old pension schemes and considerations for the Eighth Pay Commission. Political analysts view the timing of this announcement as significant, especially with upcoming assembly elections in Jammu and Kashmir and Haryana. The move is seen as an effort by the Modi government to garner support from government employees, particularly after Finance Minister Nirmala Sitharaman hinted at the need to revise the NPS during the recent budget speech.
The UPS differs from the NPS in several key aspects. Under the NPS, employees contribute 10% of their basic salary, with the government adding 14%. In contrast, the UPS eliminates the need for employee contributions altogether, with the government contributing 18.5% of the employee's basic salary. Implementing UPS will require the government to allocate an additional ₹6,250 crore from its treasury in the first year, with costs expected to rise annually. This substantial financial commitment ahead of regional elections suggests potential political motivations behind the scheme, especially considering the lack of significant announcements for the general populace in the recent budget, including no income tax exemptions.
The government has outlined several features of the UPS. Retirees will receive a guaranteed pension amounting to 50% of their average basic pay from the 12 months preceding retirement, provided they have completed at least 25 years of service. Those with service durations between 10 and 25 years will receive proportionately reduced pensions. The scheme also includes provisions for Assured Family Pension and Assured Minimum Pension. In the event of an employee's death, their family will receive 60% of the pension immediately. Employees with a minimum of 10 years of service are guaranteed a minimum pension of ₹10,000 per month. All three pension categories will be adjusted for inflation based on the All India Consumer Price Index for Industrial Workers, ensuring dearness relief.
Additionally, the UPS offers a lump-sum payment equal to 10% of the salary for every six months of service. For example, an individual with 30 years of service will receive a lump-sum amount equivalent to six months' salary, including allowances. Notably, this payment is provided separately from the gratuity benefits.
The introduction of the Unified Pension Scheme marks a significant shift in the government's approach to employee retirement benefits, aiming to provide more comprehensive and assured financial security for public sector workers across the country.
New Delhi: The Central Government has announced the introduction of the Unified Pension Scheme (UPS), set to take effect from April 1, 2025. Union Information and Broadcasting Minister Ashwini Vaishnaw revealed the details of the scheme on Saturday, stating that the decision was approved during a Union Cabinet meeting chaired by Prime Minister Narendra Modi.
The UPS is expected to benefit approximately 2.3 million central government employees, who will have the option to choose between the new UPS and the existing National Pension Scheme (NPS). State governments are also invited to adopt the scheme, which could extend benefits to nearly 9 million additional employees if implemented at the state level.
Prior to the cabinet meeting, Prime Minister Modi conducted extensive discussions with leaders of central government employees' organizations—the first such meeting in a decade. The talks covered various topics, including the comparison between the new and old pension schemes and considerations for the Eighth Pay Commission. Political analysts view the timing of this announcement as significant, especially with upcoming assembly elections in Jammu and Kashmir and Haryana. The move is seen as an effort by the Modi government to garner support from government employees, particularly after Finance Minister Nirmala Sitharaman hinted at the need to revise the NPS during the recent budget speech.
The UPS differs from the NPS in several key aspects. Under the NPS, employees contribute 10% of their basic salary, with the government adding 14%. In contrast, the UPS eliminates the need for employee contributions altogether, with the government contributing 18.5% of the employee's basic salary. Implementing UPS will require the government to allocate an additional ₹6,250 crore from its treasury in the first year, with costs expected to rise annually. This substantial financial commitment ahead of regional elections suggests potential political motivations behind the scheme, especially considering the lack of significant announcements for the general populace in the recent budget, including no income tax exemptions.
The government has outlined several features of the UPS. Retirees will receive a guaranteed pension amounting to 50% of their average basic pay from the 12 months preceding retirement, provided they have completed at least 25 years of service. Those with service durations between 10 and 25 years will receive proportionately reduced pensions. The scheme also includes provisions for Assured Family Pension and Assured Minimum Pension. In the event of an employee's death, their family will receive 60% of the pension immediately. Employees with a minimum of 10 years of service are guaranteed a minimum pension of ₹10,000 per month. All three pension categories will be adjusted for inflation based on the All India Consumer Price Index for Industrial Workers, ensuring dearness relief.
Additionally, the UPS offers a lump-sum payment equal to 10% of the salary for every six months of service. For example, an individual with 30 years of service will receive a lump-sum amount equivalent to six months' salary, including allowances. Notably, this payment is provided separately from the gratuity benefits.
The introduction of the Unified Pension Scheme marks a significant shift in the government's approach to employee retirement benefits, aiming to provide more comprehensive and assured financial security for public sector workers across the country.
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