Unified Pension Scheme Explained: How It Differs from the NPS

Unified Pension Scheme

Unified Pension Scheme Explained: On August 24, the Union Cabinet led by Prime Minister Narendra Modi announced the Unified Pension Scheme (UPS) after protests from non-BJP-ruled states to revert the Old Pension Scheme.

The Unified Pension Scheme (UPS) will be implemented from April 1, 2025 after continuous demand from the government employees to change the new pension scheme (NPS).

While addressing the media, Minister of Union Information and Broadcasting, Ashwini Vaishnaw said, “There have been demands from government employees to reform NPS (New Pension Scheme)… PM Narendra Modi formed a committee in April 2023 on this under T V Somanathan (who was then finance secretary)… After extensive consultations and discussions, including with the JCM (Joint Consultative Mechanism), the committee has recommended the Unified Pension Scheme. Today, the Union Cabinet has approved the scheme.”

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Unified Pension Scheme (UPS) Benefits

Unlike NPS which does not provide fixed-assured pension, the Unified Pension Scheme will provide the government employees fixed-assured payments. Here are the benefits of the Unified Pension Scheme:

This scheme provides government employees who have worked a minimum of 25 years, who will get a fixed pension of 50% of the average basic over the last 12 months' superannuation.

The family assured Pension: If the employees die then their family will receive a 60% pension of the last amount they drawn.

Minimum Assured Pension: Government employees who work for at least 10 years will get Rs 10,000 a month after they retire.

There is a benefit to indexation on the assured minimum pension, the assured family pension, and the assured pension.

Combined lump-sum payment and bonus at retirement. It will be 10% of the monthly salary (pay plus dearness allowance) on the date of retirement for every six months of work.

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How Does It Differ from the NPS?

The benefits of the new Unified Pension Scheme (UPS) are the combination of both the Older Pension Scheme (OPS) and the National Pension Scheme (NPS).

The UPS includes some of the features from OPS such as a guaranteed pension, indexation for inflation, a family pension, and a minimum income.

Furthermore, it also takes some features from NPS such as a fully funded system with contributions.

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