The government has introduced a new pension plan called the Unified Pension Scheme (UPS), effective from April 1, 2025. This plan promises a guaranteed pension, family pension, and minimum pension for government employees.
Under this scheme, approved by the Union Cabinet, employees who have served for at least 25 years will receive a pension equal to 50% of their average basic pay over the past year. For those with less than 25 years of service, the pension amount will be adjusted proportionately.
Additionally, the scheme offers a family pension, which is 60% of the pension amount the employee was receiving before their death.
New Union Pension Scheme
In a significant move ahead of state and Union Territory assembly elections, the government has introduced the Union Pension Scheme (UPS), despite opposition from several non-BJP-ruled states regarding the New Pension Scheme (NPS).
Union Information and Broadcasting Minister Ashwini Vaishnaw announced that this new scheme will benefit 23 lakh central government employees currently under the NPS. The UPS will start on April 1, 2025, and employees will have the choice to select either the NPS or the UPS.
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New Union Pension Scheme Benefits
The Union Cabinet, led by Prime Minister Narendra Modi, has introduced the new UPS pension scheme to provide better financial security for government employees. Here’s a detailed look at what this scheme offers:
Guaranteed Pension: If you work as a government employee for at least 25 years, you will receive a pension equal to half of your average salary from the last year before you retire. If you work for fewer than 25 years, you will still get a pension, but it will be a smaller amount based on the number of years you worked, with a minimum of 10 years required to qualify.
Family Pension: If you pass away, your family will continue to receive 60% of the pension amount you were getting while you were alive. This ensures that your loved ones are financially supported even after you are gone.
Minimum Pension: After you retire, if you have worked for at least 10 years, you will be guaranteed a minimum monthly pension of ₹10,000. This means you will always receive at least this amount, no matter what.
Under the current pension system, employees put in 10% of their salary towards the pension fund, and the central government adds 14%. With the new UPS scheme, the government’s contribution will increase to 18%, providing more financial support for your pension.
No Plans to Reintroduce Old Pension Scheme
The Centre previously stated there are no current plans to reintroduce the Old Pension Scheme (OPS) for its employees, despite calls from non-BJP-ruled states for its implementation.
The OPS provides a guaranteed pension of 50% of the last drawn salary for life, with adjustments based on pay commission updates.
In comparison, the New Pension Scheme (NPS) is a defined contribution plan. Government employees contribute 10% of their basic salary, while the government adds a 14% matching contribution.
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New Union Pension Scheme FAQs
Q.1. What is the Unified Pension Scheme (UPS)?
Ans. The UPS is a new pension plan starting April 1, 2025, providing guaranteed pensions, family pensions, and a minimum pension for government employees.
Q.2. What benefits does the UPS offer?
Ans. The UPS offers a guaranteed pension of 50% of the average salary for employees with 25+ years of service, a 60% family pension, and a minimum pension of ₹10,000 for qualifying retirees.
Q.3. How does the UPS differ from the Old Pension Scheme (OPS)?
Ans. The UPS and OPS both guarantee 50% of the last drawn salary as a pension, but the UPS introduces higher government contributions and additional benefits such as a family pension.
Q.4. What is the contribution rate under the UPS?
Ans. Under the UPS, employees contribute 10% of their salary to the pension fund, with the government contributing 18%, compared to the 14% under the previous New Pension Scheme (NPS).
Q.5. Will the Old Pension Scheme (OPS) be reintroduced?
Ans. No, the Centre has stated there are no plans to reintroduce the OPS despite demands from non-BJP-ruled states. The focus is on implementing the new UPS.
