The Union Cabinet, led by Prime Minster Narendra Modi, approved the Unified Pension Scheme (UPS) on Saturday, which aims to provide assured pension, family pension, and assured minimum pension to government employees.
The new scheme will be effective from April 1, 2025.
Employees will be able to choose between the National Pension Scheme (NPS) and the Unified Pension Scheme (UPS). Moreover, existing central government NPS subscribers will also have the option to switch to the UPS. Meanwhile, state governments will also have the option to adopt the Unified Pension Scheme.
While announcing the details of the scheme, Union Minister Ashwini Vaishnaw said that the Centre constituted a committee that held 100 meetings with several top organizations, including the RBI and the World Bank, to make decisions on this scheme, which will benefit 23 lakh central government employees.
Addressing the media on the cabinet decisions, union minister for information and broadcasting Ashwini Vaishnaw said the pension would be based on inflation indexation.
Under this scheme, employees will get an assured pension of 50% of the average basic salary drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years.
Further, in case of demise of the retired employee, then his or her family would be able to avail an assured family pension of 60% of the pension received by the employee immediately. The new scheme also assures a minimum pension of ₹10,000 per month on superannuation after minimum 10 years of service.
Further, the employee would get a lump-sum payment at superannuation in addition to the gratuity. It would be one-tenth of the monthly emolument as on the date of superannuation for every completed six months of service. This payment will not reduce the quantum of assured pension, said a presentation shown by the minister at the media briefing.
Further, government has increased its shared of contribution under the new scheme to 18.5 per cent, while the employee contribution would remain the same. Responding to the query from the media, current finance secretary TV Somanathan, who has been appointed the next cabinet secretary said that the new scheme is expected to be more beneficial for employees compared to the current scheme.
Among other decisions, the cabinet, also approved the proposal ‘BioE3 (Biotechnology for Economy, Environment and Employment) Policy for Fostering High Performance Biomanufacturing’.
The new policy under the department of biotechnology would include innovation-driven support to research and development (R&D) and entrepreneurship across thematic sectors.
