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Unified Pension Scheme: The central government had last year announced the launch of the Unified Pension Scheme (UPS), which will apply to government employees who are already under the National Pension System (NPS). The scheme will be opened on April 1, 2025, to offer a better-secured structured pension design. As per the official notification, once an employee opts for UPS, he will not get any returns in NPS. Although the scheme is primarily applicable to central government employees, state governments can also extend it to their employees.

UPS Ensure A Minimum Rs 10,000 pension

Under the Unified Pension Scheme, retired employees get a pension of half the average basic pay based on the last 12 months of service, provided they complete 25 years of service. For those with 10-25 years of service, a minimum pension of Rs 10,000 per month will be ensured. Employees who opt for voluntary retirement after completing 25 years of service will get a pension at the same rate on reaching the normal retirement age.

On the death of the pensioner after retirement, the family of the deceased will receive 60 per cent of the pension amount as a family pension.

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Protection from Inflation

The government has ensured that monthly pensions, including family pension and minimum pension, will be linked to DR, to provide protection to retirees from the evils of inflation as well as ensure financial stability in their retirement years.

Lump sum benefit on retirement

Retired employees are entitled to a lump sum amount in addition to pension and gratuity. This will be equal to one-tenth of the basic pay and DA for every completed six months of service. However, this lump sum will not in any way affect the normal amount of pension to which the person would be entitled.

Pension Fund and contributions to ensure that the scheme is well managed, two funds will be set up:

- Individual Corpus - A fund that will receive equal contributions from the employee and the Central Government.

- Pool Corpus - This fund will receive additional contributions from the government. For this pool corpus, an amount equal to 10% of the basic salary and DA of each employee will be deducted every month and matched by the government. In addition, an additional 8.5% will be contributed by the government to the pool corpus.

Investment Options for Employees

Under this scheme, every employee has the option to choose the investment option for his corpus. In the absence of active selection, every employee will be placed under the default investment plan prescribed by the Pension Fund Regulatory and Development Authority (PFRDA).

The introduction of the Integrated Pension Scheme aims to provide much-needed financial security to employees after retirement by providing a structured pension system with built-in inflation protection.

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