Govt employees to get assured pension of 50% of basic pay under Unified Pension Scheme

Promising an assured pension of 50 per cent of the average basic pay drawn over the last 12 months prior to superannuation, the Pension Fund Regulatory and Development Authority (PFRDA) on Thursday notified operationalisation of the Unified Pension Scheme (UPS).

Details:

• This comes two months after the government had issued the UPS notification on January 24 for central government employees covered under the National Pension System (NPS).

• PFRDA said the regulations shall come into effect from April 1, 2025, and shall enable the enrolment of central government employees, including an existing central government employee in service as on April 1, 2025, who is covered under the NPS, and new recruit in the central government services, who joins service on or after April, 2025.

• It clarified that the UPS or assured payout would not be available in case of removal or dismissal from service or resignation of the employee.

• According to the notification, the rate of full assured payout will be 50 per cent of 12 monthly average basic pay, immediately prior to superannuation subject to a minimum qualifying service of 25 years against a market returns linked payout under the NPS.

• It gives the option to 23 lakh government employees to choose between the UPS and NPS, which came into effect on January 1, 2004.

Unified Pension Scheme

On August 24, 2024, the Union Cabinet, chaired by Prime Minister Narendra Modi had approved the UPS, replacing the old pension scheme (OPS), effective before January 2004, wherein employees got 50 per cent of their last drawn basic pay as pension.

“Unlike the old pension scheme, UPS is contributory in nature, wherein employees will be required to contribute 10 per cent of their basic salary and dearness allowance while the employer’s contribution (the central government) will be 18.5 per cent,” the notification said, while adding that the eventual payout depends on the market returns on that corpus, mostly invested in government debt.