TNFNew Delhi/ TNF
The central government has introduced a new pension scheme called the Unified Pension Scheme (UPS), which will replace the existing New Pension Scheme (NPS). Union Minister Ashwini Vaishnav announced this change on August 24, stating that the Cabinet has approved the UPS, which will come into effect on April 1, 2025.
The UPS will benefit 2.3 million central employees, who will have the option to choose between UPS and NPS. State governments can also adopt this scheme, potentially extending benefits to around 9 million employees nationwide.
Key Differences Between UPS and NPS: Under the NPS, employees contribute 10% of their basic salary, while the government contributes 14%. The new UPS eliminates employee contributions, with the government contributing 18.5% of the basic salary.
Employees who retire under NPS between 2004 and March 2025 will also benefit from UPS, with adjustments made based on previous withdrawals.
Before the Cabinet meeting, Prime Minister Narendra Modi met with leaders of central employee unions at his residence. The discussion is significant as it comes ahead of elections in Jammu and Kashmir and Haryana. This is the first meeting in a decade involving the Prime Minister and members of the National Council of Central Employees.
The finance minister had previously discussed NPS reforms in the budget, but the government is not considering reinstating the Old Pension Scheme (OPS). The All India Defence Employees Federation (AIDEF) has boycotted the meeting, demanding OPS instead of reforms to NPS.
Employee organizations had threatened an indefinite strike starting May 1, 2024, if their demands were not met. However, the strike was postponed following assurances of discussions from the government.
In March 2024, the government set up a committee led by T.V. Somanathan to study global pension reforms. The committee’s findings suggest that the government could potentially guarantee 40-45% of pension benefits, with recent news indicating a possible guarantee of 50% of the last salary before retirement.
