This scheme is for those central employees who have started job on or after 1 January 2004.
Unified Pension Scheme: There is great news for those doing government jobs. The Finance Ministry has announced a new pension scheme, “Unified Pension Scheme” (UPS). This scheme is for those central employees who have started the job on or after 1 January 2004. UPS will be implemented from 1 April 2025.
How will the Unified Pension Scheme work?
The Unified Pension Scheme has been designed by the government to secure the future of employees. In this, employees will contribute 10% of their basic salary and dearness allowance, while the government will contribute more than that, i.e. 18.5%. Apart from this, the government will contribute an additional 8.5% for a separate pooled corpus.
In this scheme, after retirement, the employees will get 50% of their average salary of the last 12 months as pension. This scheme is an attempt to bring back the old tradition of guaranteed pension.
What are the special features of UPS?
- Pension Guarantee: After retirement, every month you will receive 50% of your average salary of the last 12 months as pension.
- Pension will increase with inflation: Pension will increase from time to time according to inflation.
- Family Pension: If the employee dies, the family will get 60% of the pension.
- Retirement Benefits: A lump sum amount along with gratuity will be given at the time of retirement.
- Minimum Pension: Those who work for at least 10 years are guaranteed a pension of ₹10,000 per month.
- Voluntary retirement option: After 25 years of service, you can take voluntary retirement. Your pension will start from the age you would have reached the normal retirement age.
Can I leave NPS and join UPS?
Employees who are already in NPS can shift to this new scheme. However, keep in mind that once you shift to UPS, you cannot go back to NPS.
How will the change happen?
- To avail the benefit of guaranteed pension in UPS, employees will have to transfer their entire NPS fund to UPS.
- If your NPS fund is less than the minimum amount fixed for UPS, then you will have to pay the difference amount yourself.
- If your funds exceed the prescribed limit, the excess amount will be refunded to you.
When will this scheme be implemented?
The Unified Pension Scheme will come into effect from April 1, 2025. The Pension Fund Regulatory and Development Authority (PFRDA) will issue the necessary rules for this. This scheme not only assures guaranteed pension to the employees, but also promises to protect their future from inflation.
