Govt approves Unified Pension Scheme: Here are its key features and benefits

The Union Cabinet’s approval of the Unified Pension Scheme (UPS) marks a significant shift in the pension system for central government employees.

Here are five significant features:

1. Assured Pension: The scheme guarantees that employees with at least 25 years of service will receive a pension amounting to 50% of their average basic pay from the last 12 months of service. Those with fewer years of service will receive a proportionately reduced pension, but a minimum of 10 years is required to qualify.
2. Minimum Pension Guarantee: UPS ensures that no retired employee receives less than ₹10,000 per month, provided they have completed at least 10 years of service. This measure aims to provide a safety net for all eligible retirees.
3. Family Pension Provision: In the unfortunate event of an employee’s death, the scheme offers a family pension equal to 60% of the employee’s pension, providing financial support to their dependents.
4. Inflation Adjustment: The pension will be adjusted for inflation, based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). This adjustment, similar to Dearness Relief, helps safeguard retirees against the rising cost of living.
5. Enhanced Government Contribution: While employees will continue to contribute 10% of their salary towards their pension, the government’s contribution will increase from 14% to 18.5%. This increase is designed to provide greater financial security to employees under the UPS.

These features make the UPS a more robust option compared to the current National Pension System (NPS), offering a combination of guaranteed income, inflation protection, and enhanced family benefits.