The Unified Pension Scheme (UPS) is a new pension plan introduced by the Indian government to replace the New Pension Scheme (NPS)
The Unified Pension Scheme (UPS) is a new pension plan introduced by the Indian government to replace the New Pension Scheme (NPS) for central government employees. It offers a guaranteed pension of 50% of the last drawn salary for those completing 25 years of service or more, and a minimum pension of ₹10,000 per month for those with at least 10 years of service. Additionally, it provides a family pension of 60% of the employee's pension in case of their death.
Key features of the UPS:
- Assured pension: 50% of the average basic pay drawn over the last 12 months before superannuation for a minimum qualifying service of 25 years.
- Assured minimum pension: ₹10,000 per month for employees who complete at least 10 years of central government service.
- Family pension: 60% of the employee's pension in case of their death.
- Dearness relief: Periodic hikes in line with inflation trends.
- Lumpsum superannuation payout: In addition to gratuity benefits at the time of retirement.
Comparison with the NPS:
- Guaranteed pension: The UPS offers a guaranteed pension, unlike the NPS, which is based on market performance.
- Contribution: The UPS does not require individual contributions from employees, while the NPS requires both employee and government contributions.
- Family pension: The UPS provides a guaranteed family pension, while the NPS's family pension depends on the accumulated corpus and annuity plan chosen.
Impact on government employees:
The UPS is expected to provide greater financial security for central government employees, especially those who have served for a long time. It also addresses concerns raised by employees about the uncertainty of the NPS. However, it remains to be seen how the UPS will impact the government's finances and whether it will be sustainable in the long term.