Unified Pension Scheme UPS vs NPS vs OPS:The Union Cabinet of the Government of India headed by Prime Minister Narendra Modi approved the Unified Pension Scheme i.e. UPS on Saturday, 24 August. Under the UPS pension scheme, government employees will get assured pension on retirement. According to the government announcement, the new pension scheme UPS will be implemented from April 1, 2025. This entire incident has happened amid the massive response of government employees to the new pension scheme. The opposition has taken advantage of this for political gain.
In Himachal Pradesh (2023), Rajasthan (2022), Chhattisgarh (2022) and Punjab (2022), where opposition parties were or are in power, the old pension scheme has been implemented again. Before the upcoming assembly elections in Jammu and Kashmir, Haryana, Maharashtra and Jharkhand, the central government has played a big political card by announcing the Unified Pension Scheme. Details about UPS are given here.
What is UPS?
Unified Pension Scheme (UPS) is a new pension scheme for government employees. Under this scheme, provision of assured pension scheme will be made for government employees. UPS is quite different from NPS. The pension amount in NPS was not fixed. Which was one of the major criticisms of NPS by government employees. According to Union Information and Broadcasting Minister Ashwini Vaishnav, there are five main pillars of the Unified Pension Scheme.
5 Features of UPS Pension Scheme
Assured Pension
Under UPS, government employees will get a fixed pension on retirement. This will be 50% of the average basic salary of the 12 months just before retirement. However, only those who have worked for at least 25 years will get the benefit.
Assured Family Pension
Family pension will also be given under the Unified Pension Scheme. This will be 60 percent of the employee’s basic salary. This pension will be given to the employee’s family immediately after his death.
Assured Minimum Pension
Under UPS, if an employee retires after at least 10 years of service, he will get a minimum pension of Rs 10,000 every month.
Inflation Indexation Benefit
Assured Pension, Assured Family Pension and Assured Minimum Pension, all three will get DR (Dearners Relief) money according to inflation. Which will be based on All India Consumer Price Index for Industrial Workers.
gratuity
An employee will be given his salary and allowances for the last 6 months of his job as a lump sum amount. The lump sum payment will be made at the time of joining the Unified Pension Scheme. This will be 1/10th of the employee’s last basic salary.
Who will get the benefit of UPS
Union Minister Ashwini Vaishnav said that central government employees will have the right to decide whether they will remain in NPS or join the Unified Pension Scheme. Cabinet Secretary T V Somanathan also said that this scheme will be applicable to all those who have retired under NPS since 2004. However, UPS will be implemented from April 1, 2025. But all employees who retired under NPS from 2004 to March 31, 2025 will be eligible for all five benefits of UPS. Somanathan said that I think it would be better to go to UPS in more than 99 percent of the cases. According to my knowledge, no one would want to remain in NPS.
Difference between UPS and OPS
Now talking about the difference between UPS and NPS, Somnath said that about Rs 800 will be spent on the outstanding amount and about Rs 6,250 crore will be spent on the government treasury to implement it in the first year. In the old pension scheme, half the amount of the last salary was given as pension after retirement. It was decided by the basic salary of the employee and inflation figures.
In the old pension, a gratuity of Rs 20 lakh was given and money was given to the family of the retired employee on his death. In this, the government used to give full pension cover without making any deduction from the salary of the employee. Somnath said that one difference in the changes made today is that assurance has been given and things cannot be left to the market forces.
NPS had replaced the old pension scheme
NPS replaced OPS on 1 January 2004, following the central government’s efforts to reform India’s pension policies. People joining government service after this date were covered under NPS. Under OPS, employees could withdraw 50 per cent of their last salary as pension after retirement. NPS was started by the Atal Bihari Vajpayee government. OPS also had a shortcoming. It did not have any special reserves. Due to this, OPS could not remain sustainable for a long time.
Data shows that the pension payments of the Centre and states have increased manifold in the last 3 decades. In 1990-91, the Centre’s pension bill was Rs 3,272 crore and the total expenditure of all states was Rs 3,131 crore. By 2020-21, the Centre’s bill increased 58 times to Rs 1,90,886 crore and for the states it increased 125 times to Rs 3,86,001 crore.
