A new rule by the 7th Pay Commission is taking a significant turn in the lives after retirement of central government employees with effect from April. Union Finance Minister has announced that the Unified Pension Scheme will commence from April 1, 2025. The new scheme is the alternate of the present National Pension System (NPS). This new pension scheme is being created with the motive of affording enhanced financial security to the central government employees after retirement and enabling them to pass their post-service lives without any financial worries.
Forms And Benefits Of UPS
The Unified Pension Scheme, or UPS, is essentially a newly designed pension framework to provide more stable and reliable pension benefits than NPS. In this context, pension will be equated to 50 percent of the last salary drawn by employees. This benefit is of utmost importance because it guarantees a fixed monthly income to all employees, which will facilitate the proper planning of expenses in their retired lifespan. The features of the Unified Pension Scheme are very attractive, as it will not be subjected to any kind of fluctuation due to market economy, thus keeping employees insulated from economic uncertainty. All these benefits, however, will be available to only those employees who will have worked for a minimum of ten years.
Difference between National Pension System And Unified Pension Scheme
Both NPS and the newly launched UPS have many critical differences regarding how each pension scheme operates. Such as, NPS would be termed a market pension scheme since the amount of pension payable under it would be based on the merits of market options.NPS is a market-based pension scheme, in which the pension amount depends on market conditions. Emplyees contribute 10 per cent of their salary under the current NPS, while the government contributes 14 per cent. However, Unified Pension Scheme is not the market-based but ensures a pension of 50 percent of the last salary paid. Goverment contribution increases to 18.5 percent under this new scheme, whereas employee contribution remains unchanged. This amounts to a huge boon to all central government employees.
Date Of Budget Application
The Unified Pension Scheme will be applicable from April 1, 2025. This day would turn the new pension scheme into a reality for the central government employees. Soon the government would bring out the detailed procedures and guidelines via which this scheme would be implemented, thus helping the employees enjoy their benefits. Eligible employees are urged to visit either their departments or the pension department to find out the procedure to switch onto this scheme. This is to ensure that the employees complete this procedure timely so that they enjoy benefits from the scheme.
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