Unified Pension Scheme

About the Unified Pension Scheme:

• The Unified Pension Scheme (UPS) was introduced by the government on August 24, 2024, replacing the 21-year-old National Pension System (NPS) with a structure closely resembling the Old Pension Scheme (OPS).

Key Features of the Unified Pension Scheme:

• Guaranteed pension: The UPS promises government employees 50% of their last drawn pay as a lifelong monthly pension.
• Dearness relief: The pension includes a periodic dearness relief hike in line with inflation trends.
• Family pension: In the event of a government employee’s death, the family is assured a pension equivalent to 60% of the employee’s pension.
• Superannuation payout: A lump sum payment in addition to gratuity benefits will be provided at the time of retirement.
• Minimum pension: A minimum pension of ₹10,000 per month is assured for those who complete at least 10 years of central government service.

Contributions under the UPS:

• The scheme is contributory, requiring:
  • Employees to contribute 10% of their salary.
  • The government is to contribute 18.5% of the salary.
• The government’s contribution may be adjusted based on periodic actuarial assessments to ensure the scheme's sustainability.

Transition from NPS to UPS:

• National Pension System (NPS): Originally implemented for employees joining on or after January 1, 2004, the NPS linked pension payouts to the accumulated contributions from both the government and employees, invested in market-linked securities.
• Switch option: Employees who joined after 2004, including retirees, have the option to switch from NPS to UPS, which is expected to be beneficial for approximately 99% of NPS members.

Q1. What is the PFRDA (Pension Fund Regulatory and Development Authority)?

The Pension Fund Regulatory & Development Authority Act was passed on 19th September, 2013 and the same was notified on 1st February, 2014. PFRDA regulates NPS, subscribed by employees of Govt. of India, State Governments and by employees of private institutions/organizations & unorganized sectors. The objective of PFRDA is to promote old-age income security by establishing, developing and regulating pension funds to protect the interests of the subscribers of pension funds and for matters connected therewith or incidental thereto.

Source: Assured pensions return as government backtracks on New Pension Scheme - The Hindu