PM Modi-led Cabinet approves Unified Pension Scheme for govt employees providing assured minimum pension

Cabinet Decisions: In a major decision, the Prime Minister Narendra Modi-led Cabinet on Saturday (August 24) approved the Unified Pension Scheme (UPS) for government employees, providing minimum assured pension and family pension. The significant move is aimed at providing assured pension, family pension and minimum assured pension to central and state government employees. Union Minister Ashwini Vaishnaw shared the information during the press conference after the Cabinet meeting. She said the Centre constituted a committee which held over 100 meetings with various leading organisations including the RBI and the World Bank.

Based on the committee’s recommendation, the UPS was approved at Saturday’s Cabinet meeting.

Unified pension scheme will benefit 23 lakh government employees

Around 23 lakh central government employees would benefit from UPS, the Minister said, adding that they will have the option to choose between the New Pension Scheme and UPS.

“Today the Union Cabinet has approved the Unified Pension Scheme (UPS) for government employees which provides for assured pension… 50% assured pension is the first pillar of the scheme… the second pillar will be assured family pension… Around 23 lakh central government employees would benefit from the Unified Pension Scheme (UPS)… There will be an option for employees to opt between NPS and UPS,” he said.

Unified Pension Scheme approved after consultations with Reserve Bank of India and World Bank

“Government employees have demanded some changes in the national pension schemes. For this, Prime Minister Modi constituted a committee under the chairmanship of Cabinet Secretary TV Somanathan. This committee held more than 100 meetings with different organisations and almost all states. There is a difference between how PM Modi works and how the opposition works. Unlike the opposition, PM Modi believes in holding extensive consultations. After extensive consultations with everyone, including the Reserve Bank of India and the World Bank, the committee has recommended a unified pension scheme. Today, the Union Cabinet has approved this unified pension scheme, and it will be implemented in the future,” he said.

Options for central and state government employees

According to the Centre, central government employees will be given the option to decide whether they want to remain in the National Pension System (NPS) or join the Unified Pension System. State government employees can also opt for the new UPS. “If adopted by state governments as well, it can benefit over 90 lakh government employees who are currently in the NPS,” the government said.

The UPS will be applicable from April 1, 2025. The implementation cost of the scheme will be Rs 6,250 crore in the first year. The UPS will be applicable to all those who have retired under the NPS from 2004 onwards.

• UPS provisions will apply to earlier NPS retirees (who have already retired).
• Arrears from past periods will be paid with interest at PPF rates.
• UPS will be available as an option for employees. Current and future employees will have the choice to join either NPS or UPS. The choice, once made, will be final.
• The employee contribution will not increase. The government will provide an additional contribution to implement the SAI.
• The Government’s contribution has increased from 14% to 18.5%.

Highlights of the Unified Pension System

• Guaranteed pension: 50% of the average basic salary received during the last 12 months prior to retirement for a minimum of 25 years of service. Proportional for shorter periods of service up to a minimum of 10 years of service.
• Insured Family Pension: 60% of the worker’s pension immediately prior to his or her death.
• Minimum Assured Pension: Rs 10,000 per month on retirement after a minimum of 10 years of service.
• One-time payment at the time of retirement, in addition to gratuity. 1/10 of the monthly salary (salary + DA) in effect on the date of retirement for every six months of service completed. This payment will not reduce the amount of the assured pension.

PM Modi reacts to Cabinet decision on UPS

Addressing X, Prime Minister Modi said UPS ensures “dignity and financial security of government employees.”

“We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension System ensures the dignity and financial security of government employees, in line with our commitment to their well-being and a secure future,” he said.