The central government has introduced the Unified Pension Scheme (UPS) as an alternative to the National Pension Scheme (NPS). It is set to take effect on April 1. This new scheme will offer eligible central government employees, who are currently enrolled in the NPS, an option to switch to the UPS.
UPS benefits and eligibility
The Unified Pension Scheme (UPS) was introduced in response to government employees’ long-standing demand for the return of the Old Pension Scheme (OPS), which guaranteed retirees 50 per cent of their final salary as pension. Under the UPS, employees will now contribute 10 per cent of their basic salary, including the dearness allowance (DA), while the government’s contribution has been increased to 18.5 per cent, up from the previous 14 per cent. This change aims to provide better pension benefits for government workers in their retirement.
In addition to this, a separate pooled fund will be created with an extra 8.5 per cent contribution from the government. As a result, the UPS will provide participants with a pension equal to 50 per centof their average basic salary over the last 12 months, ensuring a more secure retirement.
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