Beginning on April 1, 2025, the Unified Pension Scheme is anticipated to provide benefits to approximately 230,000 employees of the central government.
Have you been impatiently awaiting the government to propose an improved pension plan? The Unified Pension Scheme (UPS), which ensures that you, as a government employee, will receive 50% of your last drawn salary as a pension, was approved by the Union Cabinet on Friday. About 230,000 central government employees, including you, are anticipated to benefit from this new program, which is scheduled to go into effect on April 1, 2025. This figure could increase to 900,000 if state governments choose to implement the program, extending the benefits even further.
How does the Unified Pension Scheme work?
Employees of the government will contribute 10% of their base pay plus Dearness Allowance (DA) under this plan, with the government matching the remaining 18.5%. A different pooled corpus is also in place, with an additional 8.5% coming from the government. You will receive a pension from UPS that is equal to 50% of your average base pay for the previous 12 months.
“The UPS could modernize India’s pension system, offering a more sustainable approach for both the government and the employees,” stated Adhil Shetty, CEO of Bankbazaar.com. But how well it is executed will determine how effective it is.”
How much pension will you get?
Krishna Mishra, CEO of FPSB India, assists us in decomposing the calculation for Ashish, a 42-year-old government employee making Rs 9 lakh a year with a basic pay of Rs 7.8 lakh, so you can understand how much pension you could receive. The sum that he would receive under each plan differs:
