Cabinet Approves Unified Pension Scheme
The Union Cabinet, led by Prime Minister Narendra Modi, approved the Unified Pension Scheme (UPS), a significant reform in India’s pension framework. The scheme is designed to provide enhanced financial security to retirees while incorporating inflation-adjusted benefits.
Important Features of the Unified Pension Scheme (UPS):
- Assured Pension: Employees with at least 25 years of service will receive 50% of their average basic pay (calculated over the last 12 months before retirement). For those with less than 25 years of service, the pension is proportionally adjusted, but a minimum of 10 years of service is required.
- Family Pension: In the unfortunate event of the pensioner’s death, their family is guaranteed a pension equal to 60% of the deceased employee’s last drawn pension.
- Minimum Pension: The scheme ensures a minimum pension of ₹10,000 per month for employees who retire after completing 10 years of service.
- Inflation Protection: Pensions, family pensions, and minimum pensions under UPS will be indexed to inflation, ensuring that retirees and their families do not lose purchasing power over time.
- Dearness Relief: Dearness relief will be calculated based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), mirroring adjustments provided to working government employees.
- Lump Sum Payment: In addition to the standard pension and gratuity benefits, retirees will receive a one-time lump sum payment upon retirement. This payment is calculated as one-tenth of the monthly salary (including dearness allowance) for every six months of completed service. Importantly, this lump sum does not reduce the pension amount.
This reform is seen as a comprehensive attempt to improve the welfare of retired employees by ensuring stability in their post-retirement years. The inflation adjustment mechanisms embedded in the UPS are particularly valuable in a country like India, where inflation can significantly erode fixed incomes.
The new scheme is expected to benefit millions of employees across the nation, enhancing their retirement security and protecting their dependents.
