Minimum Pension Amount, Pension Calculator, and All Details About the Unified Pension Scheme (UPS)

Unified Pension Scheme (UPS): Under the chairmanship of Prime Minister Narendra Modi, the Union Cabinet has approved the Unified Pension Scheme (UPS) for central government employees, which will come into effect on April 1, 2025. This scheme aims to ensure financial security and dignity for central employees after retirement. The UPS has been introduced based on the recommendations of the T.V. Somanathan Committee (2023), benefiting 2.3 million central employees.

Options Between UPS and NPS

The government has provided employees the choice to select between the National Pension Scheme (NPS) and the Unified Pension Scheme (UPS). Current NPS members will also have the right to switch to UPS. State governments can adopt this scheme in the future, with Maharashtra being the first state to implement it.

Contribution Structure in UPS

Under UPS:

The government will contribute 18.4% of the employee’s basic salary and dearness allowance (DA).
Employees will need to contribute 10% of their salary and DA.

Example:

If an employee’s basic salary is ₹60,000, they will receive ₹30,000 and DA as a pension after retirement.
In the event of the employee’s death, the family will receive ₹18,000 and DA as a pension.

Similarly, if the basic salary is ₹70,000, the employee will receive ₹35,000 and DA as a pension, while the family will receive ₹21,000 and DA after the employee’s demise.

Family Pension and Minimum Pension

In UPS:

The family will receive 60% of the employee’s pension upon their death.
After a minimum of 10 years of service, there is a provision for a guaranteed minimum pension of ₹10,000 per month after retirement.

Additional Benefits

In addition to gratuity, a lump sum payment will be made at retirement, amounting to one-tenth of the monthly income and DA. This will be calculated every six months.

Expansion of the Scheme for States

State governments will also have the option to adopt UPS. If all states implement it, more than 9 million people will benefit. Implementing this scheme will initially add ₹6,250 crore to the government treasury annually, along with an expenditure of ₹800 crore for arrears.

Conclusion

The Unified Pension Scheme is a significant step in providing economic security to central employees and their families after retirement. This will help employees plan their financial futures more effectively, ensuring greater economic stability.