Centre notifies new Unified Pension Scheme as an option to NPS for govt employees

Assured payout

Under the UPS, determination volition beryllium an assured payout astatine the complaint of 50 per cent of the mean basal wage of 12 months instantly anterior to superannuation. In lawsuit of lesser qualifying work period, determination volition beryllium proportionate payment.

For cases of voluntary retirement, the UPS enactment volition beryllium disposable aft a minimum 25 years of qualifying work and assured payout volition commencement from the day connected which the worker would person superannuated, if he/she had continued successful service. The UPS volition besides beryllium disposable for employees compulsorily retired nether cardinal regularisation 56 (j), which is not a punishment nether cardinal civilian services rules, the notification said. However, assured payout volition not beryllium disposable successful lawsuit of removal oregon dismissal from work oregon resignation of the employee. “In specified cases, the Unified Pension Scheme enactment shall not apply,” it said.

In lawsuit of decease of the payout holder aft superannuation, household payout astatine the complaint of 60 per cent of the admissible payout earlier his demise, volition beryllium assured to the legally wedded spouse, the notification said.

Dearness Relief volition beryllium disposable connected the assured payout and household payout, and it volition beryllium worked retired successful the aforesaid mode arsenic DA.

Corpus and investment

There volition beryllium 2 funds nether the UPS: one, an idiosyncratic corpus with worker publication and matching cardinal authorities contribution; and two, a excavation corpus with further cardinal authorities contribution.

The publication of employees volition beryllium 10 per cent of (basic wage + Dearness Allowance (DA) with an equivalent matching cardinal authorities contribution. Both volition beryllium credited to each employee’s idiosyncratic corpus. Separately, the cardinal authorities volition supply an further publication of an estimated 8.5 per cent of (basic wage + DA) of each employees who person chosen UPS, to the excavation corpus connected an aggregate basis. “The further publication is for supporting assured payouts nether the UPS,” the notification said.

The employees volition beryllium capable to marque concern choices for the idiosyncratic corpus only, which would beryllium regulated by the Pension Fund Regulatory and Development Authority (PFRDA). There volition besides beryllium a ‘default pattern’ of concern defined by PFRDA. The concern decisions for the excavation corpus volition beryllium taken solely by the cardinal government.

UPS vs NPS vs OPS

The provisions of the UPS volition besides beryllium applicable, mutatis mutandis, to past retirees of NPS, who person superannuated earlier the operationalisation day of the UPS. Such superannuated employees volition beryllium paid arrears for the past play on with involvement arsenic per Public Provident Fund rates, the notification said.

The UPS approved past twelvemonth has been seen arsenic a governmental effect to the festering grouse among authorities employees, who signifier a vocal governmental constituency. The authorities employees had raised grievances astir inadequate stableness of income and information to families nether the earlier NPS. The UPS is expected to outgo astir Rs 6,250 crore successful the archetypal twelvemonth of its rollout on with other expenditure of Rs 800 crore towards arrears of already retired employees, arsenic per authorities estimates elaborate astatine the clip of the support of the scheme.

The statement implicit pension for authorities employees has been a contentious contented among states also. States of Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh had announced reverting to the OPS from NPS successful 2023, which had led to concerns implicit the interaction connected their fiscal health. In January 2023, the Reserve Bank of India (RBI) had flagged concerns astir strain connected authorities finances for states opting to revert to OPS.

Under the aged pension scheme, which was an unfunded, non-contributory scheme, authorities employees utilized to get defined benefits station status – 50 per cent of their past drawn wage arsenic monthly pension. Under the NPS, which covers employees who joined work station January 2004, contributions are defined but benefits beryllium connected the market.