Unified Pension Scheme (UPS)-Features, Benefits, Advantages over Old Pension Scheme(OPS) and National Pension System (NPS) 2004-MDWIX Review.

Pension Life: Secured with Unified Pension Scheme (UPS). 

            India Government led by Prime Minister, Narendra Modi is always experimenting on the existing system to renovate or to reinstate the ancient procedures to make it's governance praiseful in and abroad. Sometimes it achieved the success and often got the national protest. But the moto of PM is to simplify the process of public relation to government benefits. So he aims to frame universal rules for ease and simple approach for public conveniences. 

UPS Scheme

           One of the major liability for a government is the settlement of the retired government servant. A notable portion of annual budget is expended for the retired employee's expenses in General Provident Fund (GPF) & Old Pension Scheme with monthly pension @50% of basic pay on time of retirement along with prevailing rate of dearness allowance (DA). Through this scheme retired employees enjoy more secured retired life. The global economy experts suggest for one time consolidate payment on superannuation of the employees. Thus the Contributory Provident Fund (CPF) was introduced. In this scheme company contributes 12% of basic pay along with employee contribution @12%. This 24% of basic pay is deposited to National Employee Provident Fund organization. On retirement the employee get their accumulated money in their account. This has also the drawback. After getting this amount, most of the retired employee bankrupt for improper utilization of their fund. Most of the retired person suffers from poverty. Government of India realised the situation of the retired govt. employee. For the convenience of employee and govt. in the year 2004, National Pension System (NPS) was introduced for mutual benefit of employee and employer. In this scheme employee needs to deposit 10% of monthly basic along with adjusted Dearness Allowance. Same amount is to be deposited by the government. This government contribution was raised to 14% in 2019. Thus the total emolument of corpus fund will be bifurcation in to two parts. Sixty percent (60%) of total NPS corpus value can be withdrawn by the retired employee and rest 40% will be invested in annuity fund so that monthly pension roughly 35% of their last salary would be given to pensioner. This is not much beneficial financially to the pensioner because it never guarantees the assured pension. So there is an unhappiness among the retired employee in the nation. 

          Cabinet of NDA Government on 24th of August 2024 approved the proposal of reinstating of the old pension scheme with slight modification as unified pension scheme (UPS). Accordingly union minister, Mr. Ashwini Vaishnaw declared the scheme details in a press conference. Perhaps it may reduce the Govt. liability in their current tenure. However it may be, the news on reinstating of this pension scheme gives the smile on the face of current central govt. employee. Future might say something different.   

Unified Pension Scheme (UPS) is redesigned with Five features. These are discussed herewith.

1) Assured Pension: The retire employee will get monthly pension amounting 50%  of average basic pay during the retirement year for a qualifying of 25 years of service. The pension will be proportionate of year of service period with minimum requirement of 10 years.

2) Assured family pension: In case of retiree death, his family is eligible to get 60% pension that was drawing immediate before his death.

3) Assured minimum pension: It guaranties minimum Rs10 thousands pension on qualifying 10 years  of service. It benefits the lower income group employee.

4) Inflation Indexation: The assured pension, family pension and minimum pension will be evaluated through consumer price index(CPI) of the country. Accordingly dearness relief (DA) will be paid.

5) Lump Sum Payment: In addition to Gratuity a lump sum payment equivalent to 1/10th basic for every six month completion of service.

     This unified pension scheme will be effective from 1st of April 2025. This will benefit 23 lakhs of central government employee. The existing employee with NPS may opt to transfer to UPS. The employee need not bear extra burden if they migrate their pension scheme. The state government and any other organization may incorporate the scheme.

Difference between Old Pension Scheme (OPS), National Pension System (NPS) & Unified Pension Scheme (UPS).

         Old Pension Scheme (OPS) is guaranteed fixed pension @50% of  last basic salary drawn with DA adjustment. The employee's contribution is nil.

          NPS is the market linked returns & it has no guaranteed pension. Employee contribution is @10% of basic salary along with Dearness. Government contribution is @14% basic salary(from 2019).

         UPS System is a balance of OPS & NPS. Employee contribution for both of UPS & NPS same but extra amount must be contributed by government to pay out assured pension amount beyond earned amount from NPS corpus investment. 

Conclusion: The scheme is preliminary published. Most of labour unions are waiting for the rule associating the detail features of the scheme.  

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