Union Cabinet Approves Unified Pension Scheme to Benefit 23 Lakh Central Government Employees

Desk Report, August 25, 2024: In a landmark decision aimed at bolstering financial security for central government employees, the Union Cabinet, led by Prime Minister Narendra Modi, has approved the Unified Pension Scheme (UPS). The scheme, set to take effect on April 1, 2025, is designed to benefit approximately 23 lakh central government employees, with potential expansion to 90 lakh employees if state governments adopt the framework.

Key Features of the Unified Pension Scheme

The UPS introduces several significant benefits for government employees:

– Assured Pension: Employees will receive a pension equivalent to 50% of their average basic pay over the last 12 months of service, provided they have at least 25 years of service. For those with a minimum of 10 years of service, the pension will be proportionate to their service duration.

– Minimum Pension: Retirees will be assured a minimum pension of Rs 10,000 per month, contingent on having served a minimum of 10 years.

– Family Pension: In the event of an employee’s death, their spouse or family members will be entitled to a family pension amounting to 60% of the employee’s pension.

– Inflation Protection: The scheme includes inflation indexation for the assured pension, family pension, and minimum pension, with dearness relief linked to the All India Consumer Price Index for Industrial Workers (AICPI-IW).

– Lump Sum Payment: Retirees will also receive a lump sum payment, calculated as one-tenth of their monthly emoluments (pay + dearness allowance) for every six months of completed service. This will not impact the quantum of the assured pension.

– Arrears for NPS Retirees: Those retired under the National Pension System (NPS) will receive arrears with interest at Public Provident Fund (PPF) rates for the period preceding the scheme’s implementation.

– Employee Contribution: The scheme will not increase employee contributions. However, the government’s contribution will rise from 14% to 18.5% to support the UPS.

– Option to Switch: Current NPS enrollees can opt to switch to the UPS, with the decision being final. This option provides flexibility for both existing and future employees.

The Union Cabinet’s decision also paves the way for state governments to consider adopting a similar pension framework, potentially extending the UPS benefits to a broader base of state government employees currently under the NPS.

Prime Minister Narendra Modi underscored the scheme’s significance in a social media post, stating, “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.”

The introduction of the Unified Pension Scheme marks a substantial enhancement in the financial security of government employees, reflecting the government’s commitment to improving the welfare of its workforce.

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