Centre's Unified Pension Scheme to give higher pensions: Report

Centre's Unified Pension Scheme set to benefit 23 lakh central employees, with state adoption potentially extending to 90 lakh.

Government employees subscribing to Centre’s Unified Pension Scheme (UPS)- which was announced on August 24- are likely to see a major rise in their pension cheques, a report claimed. The government’s contribution under UPS will jump to 18.5 per cent from the current 14 per cent, Times of India reported, owing to which it is likely to provide a 19 per cent overall boost to pensions of employees who start with a monthly salary of ₹50,000.

The Union Cabinet gave green light to UPS for government employees which is likely to benefit 23 lakh central employees and the number could extend to 90 lakh.

The report considered a 3 per cent annual salary increase and an 8 per cent compounded annual growth rate of 8 per cent but the calculations left out dearness allowances and pay commission awards. This means that the pension corpus could be even higher, the report said.

At present, the Centre has three pension fund managers for its employees which include State Bank of India, Life Insurance Corporation Unit Trust of India.

The Union Cabinet gave green light to UPS for government employees which is likely to benefit 23 lakh central employees and the number could extend to 90 lakh if state governments choose to adopt the same framework.

The UPS will be implemented from April 1, 2025 and will give benefits including an assured pension equivalent to 50 per cent of the average basic pay drawn over the last 12 months prior to retirement.

To be eligible for the same, employees must have a minimum of 25 years of service while for those with shorter service periods, the pension amount will be proportionate if they have served for at least 10 years.