The central government is set to introduce the Unified Pension Scheme (UPS) from April 1, aiming to provide financial security to central employees post-retirement. This initiative is particularly beneficial for those who seek a stable income rather than a market-linked pension.
Key Highlights of the Unified Pension Scheme (UPS)
Starting April 1, approximately 23 lakh central government employees will be eligible for the new pension scheme. Under this scheme, employees with at least 25 years of service will receive a guaranteed pension amounting to 50% of their average basic salary from the last 12 months before retirement. This move is expected to bring financial stability to retirees, ensuring a predictable income source.
Hybrid Model Incorporating OPS and NPS Features
The UPS has been designed as a hybrid model, incorporating features of both the Old Pension Scheme (OPS) and the National Pension System (NPS). Employees who have served between 10 to 25 years will be eligible for a minimum monthly pension of Rs 10,000. Additionally, in the unfortunate event of a pensioner's demise, their family will receive 60% of the last drawn pension as a family pension.
Moreover, central government employees currently enrolled in the NPS will have the option to switch to UPS, providing them with a more stable retirement income compared to the market-based returns of NPS.
Why Was UPS Introduced?
The NPS, introduced in 2004, offers returns based on market performance without any fixed pension guarantee. Over time, concerns arose among government employees regarding financial uncertainties associated with NPS. In response, the government developed UPS to ensure a more secure and predictable pension system. The new scheme balances financial security for employees while maintaining fiscal responsibility.
Implementation and Application Process
The Pension Fund Regulatory and Development Authority (PFRDA) has officially issued a notification regarding the UPS. Eligible central government employees will be able to apply for the scheme through the designated online portal starting April 1.
This strategic move by the government ensures a structured and reliable pension system, offering greater financial assurance to retiring employees and their families. As the launch date approaches, more details on the application process and eligibility criteria are expected to be provided by the authorities.
