7th Pay Commission: There is news of work for the central government employees. A new rule is going to be implemented from next month i.e. April. Actually, the Union Finance Minister had announced the launch of Unified Pension Scheme i.e.
UPS for central government employees from April 1, 2025. This scheme will work as an alternative to the existing National Pension System (NPS) and aims to provide better financial security to the employees after retirement.
What is Unified Pension Scheme?
The Unified Pension Scheme is a new structure designed to provide more stable and reliable pension benefits than the National Pension System (NPS). Under this scheme, employees will get a pension of 50% of their last salary.
NPS VS New UPS
NPS- NPS is market based, which means the pension amount depends on market conditions. Employee’s contribution is 10%, and government’s contribution is 14%.
UPS- Unlike NPS, UPS is not market based and guarantees a pension of 50% of the last salary. The government’s contribution has increased to 18.5%, while the employee’s contribution will remain the same. Please note that at least 10 years of service is required to get pension through UPS.
Who is eligible for Unified Pension Scheme?
The Unified Pension Scheme is currently available to all central government employees under NPS and are willing to switch to the new scheme.
Why was this decision taken?
In April 2023, a panel headed by Finance Secretary TV Somanathan recommended restructuring of the NPS. This led to the creation of the Unified Pension Scheme, aimed at providing greater financial security to government employees.
When will the Unified Pension Scheme become effective?
The Unified Pension Scheme will be effective from April 1, 2025. According to Cabinet Secretary TV Somanathan, UPS will be more beneficial for employees in 99% of cases, although some exceptional cases may remain under NPS. Let us tell you that this decision of the government will benefit about 23 lakh government employees and 12 lakh pensioners. The Unified Pension Scheme is expected to reduce their financial worries during retirement, improve their overall lifestyle.
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