UPS Scheme: The central government has approved the Unified Pension Scheme (UPS), through which government employees will get pension after retirement. This scheme will come into effect from April 1, 2025. While this scheme is being compared to the old pension scheme i.e. OPS, some people have said that this will increase the burden on the government treasury. On the other hand, voices of protest have also started rising regarding UPS. Congress has said that if its government is formed, it will end UPS and bring OPS.
Congress has been demanding implementation of OPS for a long time. Senior party leader Pramod Tiwari said, “What was wrong with the old pension scheme? Employees are demanding the old pension scheme. They (BJP) brought the new pension scheme, but no one accepted it. Now, they have come up with the Unified Pension Scheme. BJP is an expert in changing names. We want to say that we want the old pension scheme. If our government is formed, we will bring it back.” Other parties have also said something similar about UPS.
However, now it becomes necessary to understand what exactly is UPS and can those who have taken advantage under the National Pension Scheme (NPS) now take advantage of this scheme? Can one shift from NPS to UPS? What are the benefits of UPS? Let us know the answers to all these questions.
What is included in UPS?
23 lakh government employees are going to get the benefit of UPS. Through this scheme, a fixed pension will be given after retirement, which was not there in NPS. This was the reason why there was opposition to NPS. According to the government, there are five major things in UPS, which make it beneficial for government employees.
Assured Pension: Under this scheme, on retirement after serving for 25 years, 50 percent of the average basic salary received in the last 12 months before retirement will be given as pension. If the period of service is less, then the money received after retirement will also be less. But at least 10 years of service will be necessary, only then will this scheme be beneficial.
Assured Minimum Pension: In case of retirement after a minimum of 10 years of service, a guaranteed minimum pension of Rs 10,000 per month will be given through UPS. This means that if you have served for 10 years, the government will ensure that you get a pension of at least Rs 10,000.
Assured Family Pension: If the employees who retire die, their family will be given 60 percent of the last pension amount immediately. In this way, the family will continue to receive pension even after the death of the employee.
Inflation Indexation: Dearness Allowance (DA) will be given on the three types of pension mentioned above. Its calculation will be based on the ‘All India Consumer Price Index’ for industrial workers. At present, DA is given to government employees on this basis only. In simple words, if inflation increases, the pension amount will also increase.
Lump sum payment on retirement: There is a provision of giving lump sum amount in two ways in UPS. Firstly, a lump sum amount will be given as gratuity only after retirement. After this, the employee will get 10 percent of the salary for every 6 months of service.
What is NPS and when was it introduced?
As part of the reform in the pension policies of the country, NPS was introduced on January 1, 2004, which replaced OPS. Those who joined government jobs after this date were placed under NPS. Under OPS, the pension amount for government employees in both the center and the state was fixed, which was 50 percent of the last basic salary. The same is the case with UPS. The pension amount also increased with the increase in inflation. NPS was introduced by the government of Atal Bihari Vajpayee.
How to shift from UPS to NPS?
From April 1, 2025, all central government employees who retire with arrears on or before March 31, 2025 will be eligible for UPS. On the other hand, employees who were appointed under NPS, that is, they joined government service after April 1, 2004, have the option to choose either NPS or UPS. To shift from NPS to UPS, employees will have to inform their department before its implementation.
Once an employee decides to avail benefits under UPS, he cannot return to NPS again. The government says that 99 percent of employees will benefit from UPS. At the same time, for those retirees who have already retired under NPS, UPS provisions will be applicable on them retrospectively. They will be given the outstanding amount along with interest at Public Provident Fund (PPF) rates.