The announcement of Unified Pension Scheme, or UPS, by the Centre on August 24, 2024 has come as a relief for many who had been looking forward to a guaranteed pension. It is up to the state governments to adopt it for their employees.
Significance of 25 years
Let’s have a glance at the salient points of the scheme. Any employee will get assured pension of “50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. This pay is to be proportionate for lesser service period up to a minimum of 10 years of service.” The significant point is that a service of 25 years and above will make an employee eligible for the full impact of the scheme.
Minimum amount guaranteed
If an employee has completed 10 years of service, UPS will assure a minimum payment of Rs 10,000 per month, guaranteeing a cash flow to any employee.
Pension with basic salary of Rs 50k
If the average basic salary for the last 12 months is Rs 50,000, the minimum pension will be 50% of that amount or Rs 25,000. Dearness Relief (DR) has to be added to this amount. If the employee expires, his/her family will get 60% of Rs 25,000 or Rs 15,000 + DR.
Pension with basic salary of Rs 60k
If the average basic salary for the last 12 months is Rs 60,000, the minimum pension will be 50% of that amount or Rs 30,000. Dearness Relief (DR) has to be added to this amount. If the employee expires, his/her family will get 60% of Rs 30,000 or Rs 18,000 + DR.
Pension with basic salary of Rs 70k
If the average basic salary for the last 12 months is Rs 70,000, the minimum pension will be 50% of that amount or Rs 35,000. Dearness Relief (DR) has to be added to this amount. If the employee expires, his/her family will get 60% of Rs 35,000 or Rs 21,000 + DR.
Contributions
The government will contribute 18.5% of the basic+DR, while an employee will contribute 10%. The pension benefits will be calculated based on these amounts.
Come April 1, 2025 and government employees will be entitled to the Unified Pension Scheme (UPS). It envisages a guaranteed pension depending on their contributions. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
