The Narendra Modi-led Union Cabinet last month approved the Unified Pension Scheme (UPS) in what was hailed as a major reform in the country’s pension system.
Under the scheme, central government employees stand to recieve fixed monthly pension after retirement — 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years.
While the scheme is aimed at ensuring financial security of employees, it also effectively balances the country’s economic health.
By consolidating various pension schemes under a single framework, the government has taken a proactive approach to ensure that employees across sectors can enjoy a secure post-retirement life.
One of the primary objectives of the UPS is to provide a sustainable pension solution that ensures long-term benefits for employees without placing undue financial strain on the government’s resources.
Under the Unified Pension Scheme, the government increased its contribution to 18.5 per cent and while employees contribution has been kept unchanged at 10 per cent.
With this, the government has adopted a balanced approach, incorporating contributions from both employees and employers, and is designed to provide stable returns over time.
This alignment with fiscal responsibility ensures that the pension system remains robust and resistant to economic fluctuations.
Moreover, the scheme encourages collaboration between the central and state governments, giving the later flexibility to implement the it according to their economic conditions and emphasizing on cooperative federalism.