Finmin notified the pension scheme for effective government employees from 1 April – CNBC 18

The Finance Ministry notified the Integrated Pension Scheme (UPS) on Saturday (25 January), which promises 50% of the average basic salary received in the last 12 months before retirement.

According to the Gazette notification issued by the Finance Ministry, UPS will apply to employees of the central government who fall under the national pension system and who choose this option under the National Pension System.

According to the notification, UPS or sure payment will not be available in case of removal or dismissal of the employee from service or resigning.

The notification stated that the rate of complete fixed payment will be 50% of the 12 monthly average basic salary just before the retirement, which will be subject to 25 years’ minimum qualification service against payment related to market returns under NPS.

The notification will offer 23 lakh government employees to select between UPS and NPS, which came into force on 1 January 2004.

In the case of low -qualified service period, proportional payment will be acceptable, it states that a minimum guaranteed payment of Rs 10,000 per month will be ensured if retirement of ten years or more.

The effective date of operation of integrated pension scheme will be April 1, 2025.

It states that in cases of voluntary retirement after a minimum of 25 years of qualifying service, the sure payment would begin on the date when the employee would have retired, if he continued in the service.

“In the case of the death of the payment holder after retirement, the payment holder at the rate of 60% of the payment holder, just before his death, legally married husband or wife (legally married husband or wife according to the date ) It will be ensured. Retirement date of retirement or retirement under FR56 (J), as applied, ”said this.

It states that inflation will be available on ensured payment and family payment, as the matter is, inflation relief will be fixed like dearness allowance applied to employees serving employees.

Inflation relief based on the All India Consumer Price Index (AICPI-IW) for industrial workers in case of service employees.

“Under the National Pension System (NPS), existing central government employees, on the effective date of operation of UPS option, as well as future employees of the Central Government can either choose the integrated pension scheme option under NPS or continue unified With NPS without pension scheme option, “said this.

Once an employee under NPS, who is in service on the effective date of operating UPS option, uses the UPS option, then the person’s permanent retirement account number of the employee under the integrated pension scheme Will be transferred to the corpus. , Said this.

It states that on retirement or retirement, the employee’s qualification service under the UPS option will be prescribed by the head of the office where he is employed.

The Pension Fund Regulatory and Development Authority can issue rules for operation of integrated pension scheme.

From April 1, 2025, the UPS will increase the contribution of the government from the current 14% to 18.5%.

On August 24, 2024, the Union Cabinet chaired by Prime Minister Narendra Modi approved UPS.

Prior to January 2004, employees used to get 50% of their last withdrawal basic salary under the Effective Old Pension Scheme (OPS).

Unlike the old pension scheme, UPS is contributable in nature, in which employees will have to contribute 10% of their basic salary and dearness allowance while the contribution of the employer (central government) will be 18.5%.

However, the final payment depends on the market returns on the corpus, which is mostly invested in government loans.

Under the OPS, employees were not required to contribute. However, he contributed to the General Provident Fund (GPF). At the time of retirement, the employee was paid the accumulated amount including interest.

Since NPS was less attractive than OPS, many non-BJP ruled states decided to return to the old pension scheme, which offered DA-Linked benefits.

It inspired the Center to constitute a committee under former Finance Secretary and now Nominated Cabinet Secretary TV Somathan to suggest improvement in NPS architecture.