Government employees subscribing to the newly announced Unified Pension Scheme (UPS) by the Centre are set to experience a significant increase in their pension benefits, according to a recent report by The Times of India. The scheme, which was unveiled on August 24, will see the government’s contribution rise to 18.5% from the current 14%, potentially boosting pensions by up to 19% for employees starting with a monthly salary of ₹50,000.
The report suggests that with an assumed 3% annual salary increment and an 8% compounded annual growth rate, employees could see a substantial increase in their pension corpus. Notably, these calculations do not account for dearness allowances and pay commission awards, which implies that the actual pension amounts could be even higher.
Currently, the Central government has three primary pension fund managers for its employees: State Bank of India, Life Insurance Corporation, and Unit Trust of India. With the introduction of UPS, the scheme is expected to benefit approximately 23 lakh central government employees. The number could swell to 90 lakh if state governments also decide to implement the same framework.
The Unified Pension Scheme is set to be implemented from April 1, 2025. Among its key benefits is an assured pension equivalent to 50% of the average basic pay drawn during the last 12 months prior to retirement. To be eligible, employees must have completed at least 25 years of service. For those with shorter service periods, a proportionate pension will be provided if they have served for at least 10 years.
This major policy shift reflects the government’s commitment to securing the financial future of its employees, offering them greater stability and security in their retirement years. The enhanced pension benefits are expected to provide a much-needed boost to the morale and financial well-being of the large workforce under the central government.