What is Unified Pension Scheme (UPS) in India.

What is the Unified Pension Scheme (UPS) in India? 

Unified Pension Scheme in India.

The Central Government has done a significant overhaul of the pension system by introducing the Unified Pension Scheme (UPS). This will change the long-standing demands of government employees to make changes in the New Pension Scheme (NPS), which lacked a guaranteed pension amount, causing financial insecurity after their retirement.

In a cabinet briefing, Union Minister Ashvini Vaishnav said"Government employees have demanded some changes in the New Pension Schemes. For this, PM Modi constituted a committee under the chairmanship of Cabinet Secretary TV Somanathan. This committee held more than 100 meetings with different organizations and nearly all the state's representatives," 

Main Features of the Unified Pension Scheme (UPS):

The Unified Pension Scheme (UPS) ensures a guaranteed post-retirement income for government employees.
Under this new scheme, retirees will get a pension amounting to 50% of their average basic pay from the last 12 months of service before superannuation. 
This benefit is designed for those who have completed a minimum of 25 years of service and the employees who have service of less than 25 years but more than 10 years, the pension will be proportionate to the length of their service.

In case of an employee's demise, their family will receive 60% of the pension that was being received immediately before their death. This provision ensures financial security for the dependents of deceased employees.

This UPS scheme guarantees a minimum pension of ₹10,000 per month for the retiree who has served at least 10 years of service.

This scheme is crucial for employees with lower pay, providing them with safety against inflation and financial uncertainties after their retirement. 

"After the consultations with the Reserve Bank of India (RBI) and the World Bank, the committee has recommended a Unified Pension Scheme (UPS). Today, the Union Cabinet has approved this Unified Pension Scheme, and it will be implemented soon," he further added.

The UPS is built on mainly five key pillars. The first and most significant pillar is assured pension, directly addressing government employees' primary demand for guaranteed post-retirement income.

Other pillars include assured family pension and assured minimum pension, enhancing financial security provided by the scheme. This reform comes after extensive consultations involving over 100 meetings with various organizations and nearly all states. 

The committee's recommendations were based on inputs from stakeholders like RBI and World Bank. The introduction of UPS marks a major shift from NPS by ensuring financial stability for retired government employees and their families. It aims to provide a more secure retirement phase by guaranteeing specific benefits based on service duration.