New Delhi: The Narendra Modi-led Union Cabinet last month approved the Unified Pension Scheme (UPS). The new scheme was hailed as a major reform in the country’s pension system.
‘UPS balances aspirations of government employees where a lot of uncertainty was there with the New Pension Scheme (NPS) and apprehensions of huge fiscal cost that some states were taking by reverting to OPS. The committee has tried to find a balance between fiscal cost and social security issues and aspirations of employees. Overall pension fund will increase under UPS as the market-determined return under NPS is the black box,’ said noted economist N R Bhanumurthy.
Under the Unified Pension Scheme, central government employees will receive a fixed monthly pension after retirement — 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. Under the Unified Pension Scheme, the Union government increased its contribution to 18.5 per cent and while employees contribution has been kept unchanged at 10 per cent.
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By consolidating various pension schemes under a single framework, the government has taken a proactive approach to ensure that employees across sectors can enjoy a secure post-retirement life. The new scheme is aimed at ensuring financial security of employees and also to balance the country’s economic health.
One of the primary objectives of the UPS is to provide a sustainable pension solution that ensures long-term benefits for employees without placing undue financial strain on the government’s resources.
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