23 lakh government employees associated with NPS will get the option to choose UPS, retired personnel will also benefit

The recently announced Unified Pension Scheme for central government employees will be available only to those who are subscribers of the New Pension Scheme and these also include retired employees.

in the UPS scheme, they can get 50 percent of the average basic salary as a pension during the last 12 months prior to retirement if they have rendered a minimum qualifying service of 25 years. At the same time in NPS, it is dependent on what returns come from the market.

Recently, the Union Cabinet cleared the UPS scheme, according to which a pension would be fixed proportionately on a minimum service period of 10 years. Furthermore, a pension of Rs 10,000 per month after retirement on a minimum 10-year service has been safeguarded.

This scheme has been brought to cater to the priorities of government employees regarding NPS. NPS was implemented on January 1, 2004. Earlier, under the Old Pension Scheme, employees used to get 50 percent of their last basic salary as a pension.

While it is compensation-cum-retirement scheme like the old pension scheme, unlike the latter, UPS is a contributory scheme in nature. This means that 10 percent of the basic salary along with dearness allowance has to be contributed by the employee, and, at the same time, the employer's—Central Government—contribution will be 18.5 percent.

Under NPS, the employer's contribution has been retained at 14 percent while keeping that of the employee at 10 percent. However, under NPS, this final amount which the staff receives back is linked to the market return to the fund which largely remains invested in government loans.

Under the OPS, which was in force till December 2003, he was not required to contribute anything, but, however, had been contributing to the General Provident Fund (GPF), which was repayable to them with interest.

NPS did not show itself as a "center of attraction" among the employees compared to OPS. A few non-BJP-ruled states decided to return to the old pension scheme, which gave benefits relating to dearness allowance (D.A).

Amended tracks of demands for implementing OPS intensified pressure and compelled the Centre, in April 2023, to constitute a committee under the leadership of former Finance Secretary and the present nominated Cabinet Secretary, T V Somanathan, for recommending changes in the NPS structure.

THE UNION Cabinet on August 24 gave its in-principle approval for the extended Permanent Retirement Scheme. It was a long-pending demand of government employees in the run-up to the assembly elections in some states. UPS will bring 23 lakh eligible Central Government employees under the assured pension fold. However, those opting for UPS cannot go back to NPS.

UPS is estimated to place an additional load on the government treasury of about Rs 6,250 crore per annum. However, as the number of employees changes, the expenditure on this will alter annually.

Apart from this, Rs 800 crore has to be paid as arrears under NPS to the employees who are going to retire before March 31, 2025. If these retired employees opt for UPS they will get the outstanding amount.

Union Minister for Information and Broadcasting Ashwini Vaishnav said on Sunday that 23 lakh central government employees will stand to gain from UPI on the social media platform 'X'. He said, if states also start doing this and follow the UPS framework, then more than 90 lakh government employees who are at present part of the NPS will benefit from this. The Maharashtra government, which shall go to be polled in the assembly elections later this year, announced the adoption of UPS for its employees. It is the first state in the country to do so.

RSS-affiliated Bharatiya Mazdoor Sangh (BMS) said that by introducing UPS, the government has tried to overcome the shortcomings of NPS, but there are still some issues compared to OPS. BMS will decide its future course of action only after a detailed study of UPS after it is notified.

Labor organisation All India Trade Union Congress (AITUC) said that it is just an extension of the existing NPS. It feared that there will be many anomalies in it after the implementation of UPS. It said that it will continue to fight for the restoration of non-contributory OPS.

Aditi Nayar, chief economist at rating agency ICRA, said that the provision of assured pension will increase the government's committed expenditure in future but there will be less uncertainty for employees.

Dorothy Thomas, partner at Shardul Amarchand Mangaldas & Co, said that UPS reflects a thoughtful approach to long-term social security, which addresses concerns about the adequacy and sustainability of pension benefits in a rapidly changing economic scenario.