Cabinet approves Unified Pension Scheme

Why in news ?

• The Union Cabinet approved the Unified Pension Scheme (UPS), which will provide government employees with assured pension after retirement.

Salient features of the UPS

• Assured pension
  • 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. 
  • This pay is to be proportionate for lesser service period upto a minimum of 10 years of service.
• Assured family pension
  • 60% of pension of the employee immediately before her/his demise.
• Assured minimum pension
  • 10,000 per month on superannuation after minimum 10 years of service.
• Inflation indexation
  • Dearness relief will be available on these three kinds of pensions(Assured pension, Assured family pension, Assured minimum pension), which will be calculated based on the All India Consumer Price Index for Industrial Workers, as is the case with serving employees.Lumpsum payment at superannuation
    • This will be in addition to gratuity, and will be calculated as 1/10th of the monthly emolument (pay plus dearness allowance) on the date of superannuation for every six months of service completed.
    • This payment will not reduce the quantum of assured pension

Key point 

• This scheme will come into effect from April 1 2025.
• 23 lakh central government employees will benefit from it.
• The UPS will be applicable to all those who have retired under the NPS from 2004 onwards
  • In their case (NPS retirees), they will get arrears adjusted with whatever they have already drawn under the NPS
• employees will have the option to choose between the new Unified Pension Scheme and the existing New Pension Scheme.
• staff contribution to the Unified Pension scheme will remain at 10%
  • contribution of Central Government raise to 18.5 per cent of the basic pay and dearness allowance of employees from 14 per cent now. 
  • contribution of Central Government will be reassessed every three years.
• the expenditure on arrears will be Rs 800 crore in the first year of implementation, and would cost the exchequer roughly Rs 6,250 crore.