Recently, the Modi government has announced the Unified Pension Scheme (UPS) for central employees, through which an attempt is being made to bring financial stability in life after retirement. However, with this the existing New Pension Scheme (NPS) has not been abolished, rather the option of NPS along with UPS has also been kept open for the employees. With this, people can now choose either of the two, but keep in mind that once the choice is made, the decision will be final.
The biggest feature of the Unified Pension Scheme is that it claims to provide more coordinated and comprehensive benefits. The determination of pension amount under UPS can be more transparent and beneficial than before, which will provide more financial security to employees after their retirement.
Whereas under NPS, investors get market-based returns on their pension amount, UPS can provide a stable and guaranteed pension. However, UPS may also have some terms and procedures, which employees should consider carefully.
When will the Unified Pension Scheme (UPS) be implemented? Know full details
An important step has been taken for government employees wishing to get pension benefits under the Unified Pension Scheme (UPS). UPS has been approved by the Modi government on 24 August 2024. Before the implementation of this scheme, it is important to know when it will be implemented.
The Old Pension Scheme (OPS) was in force for government employees till December 2003. After this, in January 2004, the Atal Bihari Vajpayee government abolished OPS and implemented the New Pension Scheme (NPS). But considering the impact and utility of NPS, the Modi government constituted a review committee in April 2023.
This committee was headed by TV Somanathan and it discussed with the financial secretaries of the states, leaders, and hundreds of employee unions. After this, the committee presented some recommendations to the cabinet for improving the NPS. Based on these recommendations, UPS was approved on 24 August 2024. This new pension scheme will be implemented from the next financial year, i.e. 1 April 2025.
The introduction of UPS will give government employees another option to choose their pension plan better. The new scheme aims to bring more transparency and stability in pension benefits, so that financial security can be ensured after retirement. Before you choose UPS or NPS, make sure you have looked at all aspects of both the schemes.
Unified Pension Scheme: How will your post-retirement pension be decided?
Under the Unified Pension Scheme (UPS), the amount of pension for government employees after retirement will be decided on the basis of their average salary of the last year. In this new scheme, employees will get 50% of their basic pay for the last 12 months before their retirement as pension.
For example, if an employee was getting a basic pay of Rs 50,000 in the last year of his job, then he will get a pension of Rs 25,000 every month after retirement. This pension amount will act as a stable income source for employees after retirement, ensuring their financial security.
In addition, employees who have worked for 25 years or more under UPS will get this 50% pension. But if an employee’s job period is less than 25 years and more than 10 years, then they will be given less pension in the same proportion. This means that the longer the job period, the higher the pension amount.
The main objective of this scheme is to provide financial assistance to the employees to live a respectable life even after retirement. UPS tries to give proper reward to the employees for the hard work done during their service period, so that they can remain financially self-reliant even after retirement.
Unified Pension Scheme: Pension guaranteed for those who have worked for more than 10 years
Under the Unified Pension Scheme (UPS), the government has also fixed the minimum limit of pension for those employees who have worked for more than 10 years and less than 25 years.
According to this scheme, if an employee has worked for more than 10 years, then no matter how low his basic pay is, he is assured of a pension of at least Rs 10,000 after retirement. This ensures that employees whose service period is less than 25 years will also get a minimum financial security.
This step will act as a relief for those employees whose pension amount could have been less due to less service period. Now they will also be able to get the minimum pension required to live a respectable life after retirement.