Five months after launching a revised pension scheme for government employees, the central government officially issued a gazette notification for the Unified Pension Scheme (UPS) on Saturday, just days ahead of the budget. The scheme will come into effect on April 1, 2025. Launched in August, the UPS aims to strike a balance between the Old Pension Scheme (OPS) and the National Pension Scheme (NPS), providing guaranteed pensions to government employees after retirement to ensure their financial security.

Criticism of UPS by Pensioners’ Organization

The chairman of the National Mission for Old Pension Scheme has criticized the Unified Pension Scheme (UPS), stating that it will benefit government employees less and cause more harm. Let’s break down the details of the gazette notification issued by the government.

Terms for UPS

The UPS will apply only to central government employees who are under the National Pension Scheme (NPS) and choose the UPS option. According to the notification, both existing and future central government employees can either opt for UPS under NPS or continue with NPS without UPS.

The notification makes it clear that employees opting for UPS will not be entitled to any other policy concessions, policy changes, financial benefits, or equality with future retirees.

The UPS scheme, developed after recommendations from a high-level panel led by Cabinet Secretary TV Somanathan, was earlier announced to cover retired employees under NPS as well. The current notification mentions that the Pension Fund Regulatory and Development Authority (PFRDA) will set up a system for retirees who opt for UPS.

Payment Calculations

  • Full Assured Payout: Employees with 25 or more years of service will receive a guaranteed pension of 50% of their average basic salary in the last 12 months.
  • Proportional Payment: Employees with less than 25 years of service will receive a proportional pension.
  • Minimum Guaranteed Pension: Employees with at least 10 years of qualifying service will receive a guaranteed pension of Rs 10,000 per month.

Additional Benefits

The UPS also assures government employees periodic dearness relief, similar to the dearness allowance for serving employees, in line with inflation trends. The scheme includes family pension benefits, providing 60% of the employee’s pension in the event of their death. Additionally, employees will receive a lump-sum retirement payout at the time of retirement, along with gratuity benefits.

Opposition to UPS

The pensioners’ organization has opposed the rules of UPS. Manjit Singh Patel, President of the National Mission for Old Pension Scheme India, stated that the government’s notification does not address the changes the organization demanded. He believes the government made a mistake by issuing the notification before the budget and not accepting key demands.

Employee Demands

The organization’s biggest demand was to reduce the 25-year service lock-in for pension eligibility to 20 years, as was previously the case. They also requested permission for voluntary retirement (VRS) similar to NPS and OPS and for immediate pension implementation upon taking VRS. The UPS notification states that pension will not be given immediately after VRS; employees will have to wait until they reach retirement age. Furthermore, employees have demanded that their contributions be returned with interest instead of a lump sum amount.