Central Government’s Unified Pension Scheme to Provide Increased Pensions
Image credit: Hindustan Times
Government employees enrolled in the Centre’s Unified Pension Scheme (UPS), announced on August 24, are expected to see a significant increase in their pension payments, according to a report. The government’s contribution under the UPS will rise from 14 percent to 18.5 percent, leading to an anticipated 19 percent overall boost in pensions for employees with a starting monthly salary of ₹50,000, as reported by the Times of India. The report based its calculations on a 3 percent annual salary increase and an 8 percent compounded annual growth rate, excluding dearness allowances and pay commission awards, indicating that the pension corpus could be even larger.
Currently, the Centre has three pension fund managers for its employees: State Bank of India, Life Insurance Corporation, and Unit Trust of India. The Union Cabinet has approved the UPS, which is expected to benefit 23 lakh central employees, with potential coverage extending to 90 lakh if state governments adopt the same framework. The UPS will be implemented from April 1, 2025, and will offer benefits, including an assured pension amounting to 50 percent of the average basic pay received over the last 12 months before retirement. To qualify, employees must have a minimum of 25 years of service, with those serving at least 10 years receiving a proportionate pension.
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