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Unified Pension Scheme: Centre Operationalises New Retirement Benefits for Government Employees, Check Details

Unified Pension Scheme: The Centre operationalises a new pension system for government employees, ensuring guaranteed retirement benefits. Learn more about the details.

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Unified Pension Scheme

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Unified Pension Scheme: The Union Finance Ministry has officially notified the implementation of the Unified Pension Scheme (UPS) for Central government employees under the National Pension System (NPS). This scheme, which will come into effect from April 1, 2025, promises guaranteed retirement benefits for government staff, ensuring financial security after retirement.

What is the Unified Pension Scheme (UPS)?

The newly introduced Unified Pension Scheme (UPS) is designed to provide guaranteed pension benefits to Central government employees who are already covered under the National Pension System (NPS). According to the Finance Ministry's notification, the scheme will apply to employees who choose this option under the NPS.

Guaranteed Pension Benefits for Employees

The UPS guarantees that employees who complete 25 years of service will receive 50% of their average basic pay from the 12 months before their retirement. This ensures a reliable income after retirement, offering peace of mind to long-serving government employees.

For those who have served between 10 and 25 years, the pension will be calculated on a proportionate basis. This adjustment ensures that even those with shorter service periods are entitled to fair retirement benefits.

Background and Government Support

The introduction of the Unified Pension Scheme follows consultations under the joint consultative machinery, which allows government employees to voice their concerns and resolve issues with the government. In August 2024, the Union Cabinet, led by Prime Minister Narendra Modi, approved this new pension policy, responding to demands from government staff unions for guaranteed retirement benefits.

A Long-Awaited Change for Government Staff

The scheme has been in the making since 2023, when the government formed a high-level committee under the leadership of cabinet secretary-designate T.V. Somanathan to review the existing pension system. This move was triggered by widespread dissatisfaction with the previous New Pension Scheme (NPS) and the growing demands for a shift back to the Old Pension Scheme (OPS), which had strained government finances.

With the new policy, the government aims to strike a balance between financial sustainability and providing secure retirement benefits to its employees. The notification emphasises that the Pension Fund Regulatory and Development Authority (PFRDA) will issue further regulations to ensure smooth operationalisation of the UPS.

Central Government employees Pension scheme
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