#273: Unified Pension Scheme Explained

Read this to comprehensively understand the UPS for UPSC

Unified Pension Scheme is now approved.

After hundreds of discussions spanning over an year

Union Government today approved the Unified Pension Scheme

If you don't know what it is, here's everything you need to know.

Fixed Pension

• Government employees are entitled to 50% of their average basic pay from the last 12 months before retirement.

• This pension guarantee applies to those with a minimum of 25 years of service.

Posthumous Help

Upon the employee's death, their family will receive 60% of the pension amount.

Guaranteed Minimum Pension

A minimum pension of ₹10,000 per month is guaranteed after 10 years of service, upon retirement.

Inflation Indexed

• The assured pension, family pension, and minimum pension will be adjusted for inflation.

• Dearness Relief will be calculated based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to the method used for current employees.

Lump-Sum payment at superannuation in addition to gratuity

• A lump sum equivalent to 1/10th of the monthly emoluments (pay + DA) on the date of superannuation will be paid for every six months of completed service.

• This payment does not reduce the assured pension amount.

Key Features:

1. Eligibility

Applies to past NPS retirees, with arrears paid at PPF interest rates.

2. Discretionary

Employees can opt for either NPS or UPS, with the choice being irreversible.

3. Contributions

While employee contributions remain unchanged, the government's contribution will increase from 14% to 18.5%.

4. Applied from

The scheme will be effective from 1st April 2025.

5. Preparation

Necessary legal, regulatory, and accounting changes will be made to ensure smooth implementation.

6. Impact

The scheme will benefit 23 lakh Central Government employees, with a similar model available for State governments, potentially benefiting over 90 lakh employees currently under NPS.

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