In a mega pension deal for government employees, the Modi 3.0 Government on Saturday announced the roll-out of a new comprehensive pension scheme, Unified Pension Scheme (UPS), for Central Government servants, which could potentially benefit 23 lakh employees.
This new scheme — which will come into effect from April 1, 2025 — will also be available on an optional basis to State Governments for their employees, Ashwini Vaishnaw, Union I&B Minister, told a press conference after the Cabinet meeting here.
Explaining the features of the UPS, TV Somanathan, Cabinet Secretary-Designate, who was head of the government-appointed panel that went into review of NPS for government sector, said newly framed UPS has five major benefits — assured pension; assured family pension; assured minimum pension; inflation indexation and lumpsum payment at superannuation in addition to gratuity and all in one comprehensive package.
Somanathan highlighted one of the important attribute of the UPS is that it would be a fully funded contributory scheme.
“UPS is fiscally more prudent. It remains in the same architecture of a contributory funded scheme. This is critical difference between erstwhile Old pension scheme and the new UPS. OPS was unfunded non-contributory scheme, while UPS is a funded contributory scheme.
The only difference in the changes made today is we are giving an assurance and not leave things to vagaries of market forces. Otherwise structure of UPS has best elements of both (OPS and NPS),” Somanathan said.
He said that UPS will also apply for all those government employees who have already retired under National Pension System (NPS) from 2004 onwards. “ Though new UPS will take effect from April 1, 2025, everybody who has retired from the time of inception of NPS and also including those retiring till March 31, 2025 will also be eligible for all five benefits under UPS.They will get arrears after adjusting for whatever they have drawn. Arrears will be paid with interest at PPF rates”, Somanathan said.
Somanathan noted that as many as 23 lakh central government employees can benefit from UPS. The rollout of UPS will entail an additional outgo of ₹6,250 crore for the Centre in first year and arrears of ₹800 crore in first year.
Vaishnaw said that implementation of UPS would mean Centre’s contribution to the scheme would go up from 14 per cent ( in current NPS) to 18.5 per cent per month. He made it clear government employees contribution will not increase.
The Minister also said that as many as 90 lakh State government employees can potentially benefit from UPS if the States decides to switch from NPS to UPS for their employees.
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UPS BENEFITS
According to Vaishnaw, the UPS will provide assured pension of 50 pension of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. The assured pension will be proportionate for lesser service period up to a minimum of ten years of service.
Assured family pension would be 60 per cent of the pension of the employee immediately before his/her demise. A minimum assured pension of ₹ 10,000 per month would be provided on superannuation after minimum 10 years of service.
OTHER CABINET DECISIONS
The Cabinet has also approved the Vigyan Dhara scheme with ₹10,579 crore outlay. This will include internships for class 11&12 students, increase in scope of fellowships for UG and PG, PhD, post doctor; push for better international collaborations, push for joint research and fellowships thereby reducing brain drain; focus in areas and projects related to day to day life like climate change.
The scheme will also push for product development such as development of clean tech.
“There will be a concerted push towards reduction of brain drain. This apart, the scheme will open up more opportunities for students and scholars, especially in the field of real life applications,” Vaishnaw said.
Also approved was the ‘Bio E3’ policy that will push for gene therapy, use of smart proteins & functional foods, push for bio-farming and promoting carbon dioxide capture tech for bio chemical & bio fuels.