Below is an update by the Central Government: It has launched a Unified Pension Scheme (UPS) intended to universalize a safety net for pensions with a stable pension system for employees in all sectors. The Ministry of Finance should have cleared, among others, a big question regarding its implementation: Does the Centre make the UPS mandatory for State governments?
What Does The Unified Pension Scheme (UPS) have?
It guarantees post-retirement pensions for employees in both the private and public sectors. Unionizes the two strands of the Employees’ Pension Scheme (EPS) and National Pension System (NPS), pledging to provide a clearly defined standardized pension in addition to features such as gratuity and lump-sum payments, and medical allowances.
Finance Ministry clarifies
The new announcement the Finance Ministry made was that UPS will not be implemented on a compulsory basis by states: it offers itself as being opened to voluntary adoption by the states. Instead of directing imposition, the Centre puts it across as creating a truly flexible and inclusive pension solution.
States currently operating under their pension models, whether the Old Pension Scheme (OPS) or NPS, will be free to continue with them or adopt upgrading, depending on their financial conditions.
Key Features Of Unified Pension Scheme
- Minimum pension guarantee: maximum guaranteed minimum pensions to employees of ₹10,000 every month.
- Gratuity Benefits: They will be entitled to receive gratuity upon retirement.
- Lump Sum Payout: Amounts can be withdrawn in lump sums from the size of the accumulated pension corpus.
- Flexible Contribution: Employees and employers both contribute to the scheme at a pre-decided percentage.
- Survivor Benefits: In case of death of the pensioner, their family members will get survivor benefits.
State Governments’ Responses
Most states are currently mulling adoption benefits on the UPS. Some of them really do not have deep pockets though, so the UPS would end up being their ticket to shaving pension liabilities, others probably would be against adopting whatever pension system they have now. Nevertheless, the Centre has promised any state opting for UPS technical and financial assistance.
Conclusion
There is no doubt that this Unified Pension Scheme would make something big for the financial future to secure all retired employees. But in a way, it is to be individually determined in that it is voluntary. That’s the beauty of it: every state has its own fiscal priorities. The plus point to the employees, especially those working in the unorganized sector, is that they would emerge with benefits from the scheme’s wide participation in pension coverage.
Hence, every time there is any development regarding the Unified Pension Scheme, just keep an eye for announcements from the Finance Ministry and state governments.
Also Read: EPS-95 Pension Hike: Has Minimum Pension Increased To Rs 9,000, Get The Facts