Union Cabinet OKs Unified Pension Scheme for Government Employees, starting April 2025.

IMPHAL ,Reported by : Th Ramananda Singh , Updated : 24/08/2024

Union Cabinet OKs Unified Pension Scheme for Government Employees, starting April 2025.

The Union Cabinet has approved the Unified Pension Scheme (UPS) for government employees, effective April 1, 2025, following calls for reforms to the New Pension Scheme (NPS). Minister Ashwini Vaishnaw said employee feedback led to a committee that recommended the UPS after JCM consultations.

The UPS offers a guaranteed pension, whereas the NPS does not. Employees will get a pension of 50% of their average basic pay after 25 years of service. The pension will be calculated proportionately for employees with 10 to 25 years of service. If an employee with over 10 years of service dies, their family gets 60% of basic pay plus a minimum pension of Rs 10,000. UPS adjusts pensions for inflation and provides retirees a gratuity of one-tenth of their salary for every six months worked.

Central government employees can opt for the NPS or switch to the UPS until March 31, 2025. Any money they have withdrawn previously will affect their benefits. PFRDA launched the NPS in January 2004, making it accessible to all in 2009. This system is a voluntary retirement plan, letting subscribers access funds and ensuring monthly income in retirement.

The structure of the NPS includes Tier 1 accounts, which impose restrictions on early withdrawals, thus encouraging long-term savings for retirement. In contrast, Tier 2 accounts offer greater flexibility in terms of withdrawals, making them more accessible for short-term needs. Participants in the NPS can enjoy tax deductions under Section 80 CCD, beneficial for retirement planning.. This framework supports savings and improves employees’ financial security after work.