Unified Pension Scheme Approved by Union Cabinet

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The Union Cabinet’s approval of the Unified Pension Scheme (UPS) on Saturday aims to provide social security to government employees post-retirement. The scheme blends contributory and assured pension elements and is set to replace the wholly contributory National Pension Scheme (NPS). The NPS, which became applicable to all states except West Bengal from January 1, 2004, linked pension payouts to the accumulated contributions invested in equities and market-linked securities.

This led to significant disparities in pension benefits, with some retirees receiving benefits as low as ₹10,000 even for senior officials. In response to widespread protests and growing discontent among government employees, opposition-ruled states such as Rajasthan, Tamil Nadu, Kerala, Jharkhand, Chhattisgarh, and Punjab reverted to the Old Pension Scheme (OPS). The Congress party promised to restore OPS in their election campaigns, gaining significant political traction.

The BJP-led central government reviewed the NPS and proposed the UPS, modeled on Andhra Pradesh’s Guaranteed Pension Scheme (GPS) introduced under Chief Minister Jagan Reddy in 2023. The UPS requires contributions from employees (10% of salary) and the government (18.5% of salary), assuring guaranteed pensions along with periodic dearness relief hikes based on inflation. Shiv Gopal Mishra, secretary of the Joint Consultative Mechanism (JCM), welcomed the UPS, appreciating the government’s acknowledgment of the issues with NPS.

However, some government employee forums continue to push for the complete restoration of OPS, opposing salary deductions in UPS.

The introduction of UPS is seen as a significant moral victory for the opposition, bringing to light the importance of social security for retired government employees and ensuring their economic stability. The Union Cabinet’s approval of the Unified Pension Scheme (UPS) on Saturday drew varied reactions from the Opposition.

Congress president Mallikarjun Kharge criticized it, while Aam Aadmi Party leader Sanjay Singh called it a desperate attempt to please employees ahead of elections in four states. The government’s proponents argue that, unlike the old pension scheme, UPS is contributory funded. However, the fact that UPS would impose an additional burden on the exchequer is indisputable.

This U-turn to please employees comes after the Bharatiya Janata Party’s (BJP) defeat in the Himachal Pradesh Assembly election, where the Congress promised to restore the old pension system. The U-turn on the pension scheme is not the first in Modi’s third term. The government had previously backtracked on lateral entry into bureaucracy, among other policies.

Union Cabinet approves pension overhaul

These shifts have led to jokes within political circles suggesting that the best step to get the government to change a policy is to have Rahul Gandhi question it. Despite these moves, there’s little threat from allies or the INDIA bloc at this stage.

However, introspection within the party is urgent. PM Modi himself is reportedly still questioning party colleagues on what went wrong in the last Lok Sabha polls. At its core, the BJP is facing a crisis of conviction.

Two out of the party’s three central promises—the Ayodhya Ram Temple and invalidation of Article 370—have been fulfilled. However, the third, the implementation of the Uniform Civil Code, is not gaining significant traction, and the completed promises have not translated into electoral gains. These issues were the lynchpins of BJP politics, and their diminishing electoral relevance leaves the party scrambling.

Shiva Gopal Mishra, General Secretary of the All India Railwaymen’s Federation (AIRF), expressed his satisfaction with the newly approved Unified Pension Scheme (UPS), stating that almost all of their demands have been addressed. Mishra thanked the Prime Minister for recognizing the demands of the Central government employees and for initiating discussions on the matter. The UPS features a provision for a fixed pension amount, guaranteeing a predetermined sum that a retiree will receive regularly after retirement.

Under the UPS, employees who have served for 25 years or more will receive 50 percent of their last drawn salary from the past 12 months as a pension. Additionally, they will be eligible for post-retirement inflation-linked increments in their pension. The retirement benefits under UPS also include an assured family pension, amounting to 60 percent of the employee’s basic pay, provided in the event of an employee’s pre-mature death.

Inflation-linked indexation benefits extend to the assured pension, family pension, and the minimum pension. The scheme further provides for gratuity, calculated as one-tenth of the monthly emolument (pay plus dearness allowance) as of the retirement date, based on every six months of service. The new UPS increases the government’s contribution from 14 percent (in NPS) to 18.5 percent.

The employee’s contribution will remain the same. This holistic approach aims to provide central government employees with a robust and reliable pension structure.


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  • HindustanTimes.”Ecostani | Unified Pension Scheme, a moral victory for the Opposition”.
  • ThePrint.”Modi government’s U-turns expose a well-known secret—BJP is facing a crisis of conviction”.
  • ANINews.”Almost all our demands accepted in Unified Pension Scheme: AIRF General Secretary Shiva Gopal Mishra”.

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