PM Modi hails Unified Pension Scheme as assurance of dignity and financial security for government employees

Prime Minister Narendra Modi on Saturday emphasized that the Unified Pension Scheme (UPS) is a vital step towards ensuring dignity and financial security for government employees, underscoring the government's commitment to their well-being and secure future.

His statement followed the Union Cabinet's approval of a landmark decision to guarantee 50 percent of the average basic salary as a pension for 23 lakh government employees who joined service under the National Pension System (NPS).

The National Pension System, which has been in place since April 1, 2004, for government employees, operates on a contribution-based model as opposed to the defined benefit plan that was available to employees prior to the introduction of the NPS.

"We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future," Prime Minister Modi said in a post on X.

Announcing the Cabinet's decision, Union Information and Broadcasting Minister Ashwini Vaishnaw detailed that under the new Unified Pension Scheme, government employees will receive a pension equivalent to 50 percent of the average basic pay drawn over the last 12 months prior to their retirement.

To be eligible for the full pension, an employee must have completed 25 years of service. For those with a service period of less than 25 years, but at least 10 years, the pension will be provided on a proportionate basis.

This significant policy shift allows NPS subscribers to opt into the Unified Pension Scheme, with its benefits set to commence from the beginning of the next financial year, April 1, 2025.

The Cabinet Secretary-designate, TV Somanathan, who also heads the committee established by the finance ministry to review the pension schemes for government employees, clarified that the benefits under the Unified Pension Scheme will apply to those retiring by March 31, 2025, with any due arrears to be addressed.

This move comes in the wake of several non-BJP-ruled states deciding to revert to the DA-linked Old Pension Scheme (OPS), responding to demands from employee organizations advocating for a more secure retirement plan.