[ad_1]
In a significant enhancement to the pension benefits for central government employees, the Union Cabinet on Saturday approved the Unified Pension Scheme (UPS) with an assured pension of 50 per cent of the average basic pay drawn over the last 12 months prior to superannuation, for a minimum qualifying service of 25 years.
The scheme will come into effect from the beginning of the next financial year starting April 1, benefitting over 2.3 million central government employees, according to the government. The amount would be proportionate for a shorter service period, down to a minimum of 10 years of service.
“We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future,” Prime Minister Narendra Modi said on the social media platform X.
We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future.…— Narendra Modi (@narendramodi) August 24, 2024
The Cabinet has decided that the UPS will be available as an option to central government employees. Existing and future employees will also have the option of joining the New Pension Scheme (NPS) or UPS. The choice, once exercised, will be final, the government has said.
The government’s contribution has also been increased from 14 to 18.5 per cent. “Employee contribution will not increase. Government will provide additional contribution for implementing UPS,” a presentation by the department of expenditure said.
The government will ready the support mechanism and necessary legal, regulatory, and accounting changes for the implementation of the scheme. “If also adopted by state governments, [it] can benefit over 9 million government employees who are presently on NPS,” the Centre has said, highlighting that the scheme has been designed for adoption by state governments.
Provisions of the UPS, the government said, would also apply to past retirees of the New Pension Scheme. “Arrears for the past period will be paid with interest at PPF rates,” the expenditure department’s presentation said.
According to the government, the expenditure for arrears will be Rs 800 crore. The annual cost increase will be around Rs 6,250 crore in the first year.
The scheme will also have two other components: family pension and assured minimum pension.
Under the assured family pension component of the scheme, the family members of the employee will get 60 per cent of the immediate pension upon their demise. Under the assured minimum pension component, the employees will get a minimum of Rs 10,000 on superannuation after a minimum of 10 years of service.
The new scheme will also have inflation indexation. Dearness relief will be provided on all three components based on the All India Consumer Price Index for Industrial Workers (AICPI-W) as in the case of serving employees. The scheme will also provide a lump-sum payment at superannuation in addition to gratuity and 1/10th of the monthly emolument (pay + DA) as on the date of superannuation for every completed six months of service.
This payment is expected not to reduce the quantum of the assured pension.
In March 2023, the Narendra Modi government had set up a committee led by former Finance Secretary T V Somanathan to explore ways to improve pension benefits under NPS without reverting to the non-contributory Old Pension System (OPS), which has been deemed fiscally unsustainable.
First Published: Aug 24 2024 | 10:08 PM IS
[ad_2]
Source link