PM Modi said UPS will ensure the “dignity and financial security” of employees. He posted on X that he is proud of all government employees for their hard work towards the development of the country.
What is the Unified Pension System (SUP)?
The central government has launched the Unified Plan Pension system (UPS), which provides government workers with a stable salary pension depending on their length of service and the last basic salary received.
According to media reports, central government employees can choose between the Unified Pension System (UPS) and the National Pension System (NPS). Also, existing central government NPS subscribers will be given the option to transfer to the UPS. State governments will also be able to opt to implement the Unified Pension System soon.
According to a news report by the Times of India, Cabinet Secretary-designate TV Somanathan said that an actuarial calculation would be done every three years to ensure that the liability does not go unfunded, as was the case with OPS, where the government had to bear the entire liability without the employee contributing anything.
The Times of India quoted Ashwini Vaishnaw, India’s Minister for Information and Broadcasting, as saying that the “five pillars” of UPS will be implemented from April next year. Vaishnaw also said that a minimum pension of Rs 10,000 will be offered to those who work for 10 years, and the family pension for the spouse will be fixed at 60% of the deceased government employee’s pension. Also included is a one-time payment on retirement equivalent to 10% of salary and dearness allowance (DA) for every six months of service. The minister said, “On completing 30 years of service, approximately six months’ worth of salary will be disbursed as a lump sum on retirement,” and clarified that this payment is separate from the gratuity.
Let us now look at five important features of the Unified Pension System, according to a press release published on August 25, 2024.
UPS: 5 important things you should know
- Pension assured: For a minimum of 25 years of service, 50% of the average basic salary received during the last 12 months prior to retirement. Up to a minimum of ten years of service, this compensation must be proportional to shorter periods of service.
- Family pension guaranteed: 60% of the worker’s pension immediately prior to his death.
- Minimum pension assured: After at least ten years of service, @10,000 per month in superannuation.
- Inflation indexation: In the case of assured pensions, assured family pensions and assured minimum pensions, the reduction in cost of living is based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), as in the case of service sector employees.
- One-time lump sum payment on retirement in addition to gratuity: 1/10 of the monthly emoluments (salary + DA) in effect on the date of retirement for every six months of service completed. This payment does not reduce the amount of the guaranteed pension.
What is NPS?
The central government has introduced the defined contribution pension system, known as the National Pension System (NPS), which replaces the existing Defined Benefit Pension system with effect from 1 January 2004.
In the NPS, a government employee contributes to his or her pension with his or her monthly salary and a matching contribution from the employer. The funds are then invested in specific investment plans through pension fund managers.
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