 "Pension, Savings, Retirement")
Centre o notify Unified Pension Scheme by October 15 (Photo: Shutterstock)
The Indian government is fast-tracking efforts to roll out the Unified Pension Scheme (UPS) ahead of FY25. Officials aim to notify the scheme by October 15, 2024, setting the stage for its implementation on April 1, 2025, according to a report by The Economic Times. The UPS is currently one of the top priorities on the government’s agenda and is expected to benefit millions of central government employees.
Cabinet Secretary TV Somanathan has been holding regular meetings with key ministries and departments to ensure a smooth transition to the new pension scheme, the report said. Somanathan, who previously chaired a committee that examined the National Pension Scheme (NPS), is overseeing the coordination of the scheme’s development.
What is the Unified Pension Scheme (UPS)?
The UPS is a new pension plan that guarantees lifelong financial support for government employees after retirement. It will offer an assured pension, amounting to 50 per cent of the average basic salary drawn during the last 12 months of service for those who have completed at least 25 years of employment. For shorter service periods, the pension will be proportional, with a minimum qualifying period of 10 years.
Additionally, the scheme includes an assured family pension—60 per cent of the employee’s pension will be granted to their family after their death. The UPS also promises a minimum pension of Rs 10,000 per month, provided the individual has completed at least 10 years of government service.
Earlier this year, Information and Broadcasting Minister Ashwini Vaishnaw confirmed that the scheme will benefit about 2.3 million central government employees. However, government estimates suggest that if state governments adopt the UPS, the total number of beneficiaries could rise to nine million.
Steps towards implementing UPS
While the Department of Expenditure is leading the scheme’s development, several departments will play a role in its implementation. The Department of Personnel and Training will assess each employee’s preference for the new scheme, as all current central government employees must decide whether to switch to the UPS or remain under the National Pension Scheme (NPS). This process is expected to be completed in time for the scheme’s April 2025 launch.
Other departments, such as the Department of Pension and Pensioners’ Welfare, are involved in finalising the finer details of the scheme. The Department of Administrative Reforms and Personnel Grievances is drafting a new service rulebook, while the Pension Fund Regulatory and Development Authority (PFRDA) is working on the investment strategy for the pension corpus. Additionally, the National Securities Depository Ltd (NSDL), which manages electronic security transactions, is examining the operational requirements for UPS.
Support of UPS and govt consultations
In August 2024, Prime Minister Narendra Modi met with representatives of the Joint Consultative Machinery, a body that advocates for central government employees. This meeting coincided with the approval of the UPS by the Bharatiya Janata Party-led government. The UPS includes key provisions such as assured pension and assured family pension, which had been long demanded by employee unions.
Shiv Gopal Mishra, secretary of the Joint Consultative Machinery’s National Council, remarked that Prime Minister Modi acknowledged their concerns after a series of protests and agreed to push the scheme forward.
If implemented as planned, the UPS will provide significant financial security to retiring central government employees, while also introducing new provisions for family benefits in the event of an employee’s untimely demise. As the government continues to refine the scheme, it remains to be seen whether state governments will adopt the UPS, which could significantly expand its reach across the country.
First Published: Oct 03 2024 | 10:16 AM IST
