Government Greenlights Unified Pension Scheme, Benefiting 23 Lakh Employees Nationwide

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Unified Pension Scheme for Central Government employees, providing a minimum guaranteed pension along with family pension. It is estimated that this will benefit about 23 lakh Central government employees who, henceforth, can opt either for the existing New Pension Scheme or the new Unified Pension Scheme. Besides, the option for implementing UPS will be available to state governments, which could help towards covering almost 90 lakh employees from the system throughout the country.

The financial burden for arrears under this scheme has been outlined by the government as Rs 800 crore, with an anticipated annual cost increase of about Rs 6,250 crore in the first year. The scheme is likely to be implemented from April 1, 2025, and Central government employees will have the option to opt either for NPS or UPS. Existing subscribers of the Centre's NPS, too, will be provided with an option to shift to the UPS.

Some of the features of the Unified Pension Scheme are:

A guaranteed pension of 50% of the average basic pay drawn during the last 12 months prior to retirement subject to a minimum qualifying service of 25 years.
Proportionate benefits for those having less service with a minimum service of 10 years.
A guaranteed Family Pension, payable at the rate of 60% of the employee's pension admissible immediately prior to his death.
There has to be a minimum assured pension of Rs 10,000 per month upon retirement after at least 10 years of service.

The scheme was developed after elaborate consultations, Union Minister Ashwini Vaishnaw said after the Cabinet meeting. A committee, set up by the government, held about 100 meetings with different top organizations, including the RBI and the World Bank, before finalizing the scheme.

The minister Vaishnaw explained that the cabinet approval to the UPS flows from the recommendations of this committee, pointing out that the fundamental features of this scheme are the guaranteed pension and family pension. He highlighted that on account of demands from the government employees for making changes in the New Pension Scheme, Prime Minister Modi had constituted a committee with Cabinet Secretary T.V. Somanathan as the chairman. In-depth consultations with various organisations and states by this committee laid the foundation for 'One Pension Scheme'.

Governance style difference Minister Vaishnaw also said, Prime Minister Modi believes in saturation consultation. Which the opposition is not doing.