- By Aditya Pratap Singh
- Mon, 26 Aug 2024 01:56 PM (IST)
- Source:JND
Unified Pension Scheme Features: The central government employees have been demanding to re-imposition of old pension scheme for a long time, they all were not satisfied with the new pension system (NPS) launched in 2004 as it provided them with assured pension without needing any fixed personal contributions during their service. On the other hand, under NPS, employees are required to contribute 10% of their basic salary every month which matches the government’s contribution of 14%.
Now they all have an option to choose the Unified Pension Scheme which consolidates the features of both NPS and the old pension scheme (OPS).
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From the following year, the Unified Pension Scheme (UPS) would come into force where an employee would need to serve for 25 years to be eligible for full pension. This implies that employees who retire in 2029 or later would be eligible for the full pension, as UPS is offered on a pro-rata basis as an alternative to NPS launched in 2004. However, the minimum pension for those who have served at least 10 years has been fixed at Rs 10,000.
Pension calculated under UPS after the 8th Pay Commission comes into force?
Based on past trends, the centre has been implementing the recommendations of a new Pay Commission every 10 years which is expected to lead to the launch of 8th Pay Commission in 2026. But this remains speculative as the government has yet to announce its commission has not done so, which… would make recommendations for implementation after Cabinet approval. The tenure of the Seventh Pay Commission ends on 31st December.
The 8th Pay Commission's pay matrix is likely to be prepared using a 1.92 fitment factor, according to reports. The existing minimum pay of Rs 1,800 and grade pay of Rs 1,800 for Level 1 under the 7th Pay Commission could be increased to Rs 34,560 using this fitment factor. The Union Government's highest pay scale level 18, for the post of Cabinet Secretary, currently has a maximum salary of Rs 2.5 lakh. The pay scale hierarchy has 18 levels, with level 18 being the top level. The pay scale might be increased to Rs 4.8 lakh under the 8th Pay Commission based on the 1.92 fitment factor.
What can be the minimum and maximum pension under UPS?
The UPS will set pension superannuation at 50% of the average monthly salary for the preceding 12 months. The first group of pensioners eligible for full pension will retire in 2029, having completed 25 years of service by then, since full pension eligibility under UPS is attained after 25 years of service.
According to central government employees, if the 8th Pay Commission comes into effect in January 2026, the minimum salary will be Rs 34,560, while the maximum could be Rs 4.8 lakh. Employees will also get five DA hikes in their pay before January 2029, when the first employee hired in 2004 retires. Assuming a 4% increase each time, the DA will account for 20% of the basic pay by then.
Those in level 1 will get a pension of Rs 20,736, as it is calculated as 50% of the basic pay plus DA, for a salary of Rs 34,560, with the 20% DA adding Rs 6,912. Similarly, for a pay of Rs 4.8 lakh, those at Level 18 will have a pension of Rs 2,88,000, with a DA of Rs 96,000, which is 50% of their last drawn salary in January.