Last Updated on September 10, 2024 by Wenivesh Team
The Indian Cabinet has recently given the green light to the Unified Pension Scheme (UPS), marking a significant shift towards simplifying and streamlining the country’s pension system. This new scheme is designed to bring all government employees under a single, comprehensive pension plan, regardless of their cadre or service.
Unified Pension Scheme Approved by Cabinet
One of the key features of the unified pension scheme is its effort to consolidate various existing pension schemes, such as the Central Civil Services (Pension) Rules, 1972, and the Central Civil Services (Extraordinary Pension) Rules, 1939, into one unified framework. This move is expected to create a more equitable system where all government employees can enjoy consistent pension benefits.
Union Cabinet approves assured 50 per cent of salary as pension for govt employees under Unified Pension Scheme
— Press Trust of India (@PTI_News) August 24, 2024
The unified pension scheme also introduces uniform pension rules, ensuring that the calculation of pensions is fair and transparent. The process will be simplified by using a standardized formula based on the last month’s basic pay and the number of years of service, making it easier for both employees and administrators to manage. This approach is anticipated to reduce the administrative burden on government departments, allowing for quicker processing and timely disbursement of pensions.
In addition to these improvements, the unified pension scheme includes several benefits aimed at enhancing the financial security of retirees. It guarantees an assured pension of 50% of the average basic pay drawn over the last 12 months before retirement for those with a minimum qualifying service of 25 years. For those with shorter service periods, a proportionate pension is offered, with a minimum qualifying service of 10 years. The scheme also provides an assured family pension of 60% of the employee’s basic pay in the event of their demise, along with an assured minimum pension of ₹10,000 per month for those who qualify.
Another important aspect of the unified pension scheme is its provision for inflation indexation, which ensures that the pension amounts, including family pensions and minimum pensions, keep pace with inflation. This feature is crucial for maintaining the purchasing power of pensioners over time. Additionally, a gratuity will be provided at the time of superannuation, which is calculated as a lump sum payment based on the employee’s emoluments and service period.
Central government employees will have the option to choose between staying in the existing New Pension Scheme (NPS) or joining the unified pension scheme. This flexibility allows employees to decide which system best meets their retirement needs.
The unified pension scheme is set to come into effect on April 1, 2025, and is expected to benefit approximately 23 lakh central government employees. The approval of this scheme by the Cabinet represents a significant step forward in modernizing India’s pension system, offering greater security and fairness to government employees as they plan for their retirement.
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