How UPS differs from other govt pension schemes, why its uptake is low, Pg 26.

Key Highlights:

• The Unified Pension Scheme (UPS), an option under the National Pension System (NPS), is available to central government employees until September 30.
• As of September 15, approximately 40,000 out of 23.94 lakh eligible employees have opted for the UPS.
• The UPS assures a payout of 50% of the average basic pay of the last 12 months before retirement, given a minimum service of 25 years.
• The Department of Pension and Pensioners’ Welfare notified the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025 to regulate service matters for employees opting for UPS.

Detailed Insights:

• The UPS was introduced as an alternative to the Old Pension Scheme (OPS), which guarantees a fixed pension, and the NPS, which is market-linked.
• Employees who choose the UPS by September 30 have a one-time option to revert to the NPS, which can be exercised up to one year before retirement or three months before opting for Voluntary Retirement Scheme (VRS).
• Under the UPS, both the employee and employer contribute 10% of basic pay plus Dearness Allowance (DA) to the Permanent Retirement Account Number (PRAN).
• The UPS includes a provision for a pool corpus funded by the government at 8.5% of basic pay plus DA, guaranteeing a minimum payout of Rs 10,000 per month after 10 years of service.
• The uptake of UPS has been slow due to ongoing demands for the restoration of the OPS, which offers an assured pension of 50% of the last drawn basic pay plus DA without employee contribution.

Key Concepts Involved:

• National Pension System (NPS): A market-linked defined contribution pension scheme mandatory for central government employees joining after January 1, 2004.
• Old Pension Scheme (OPS): A defined benefit pension scheme guaranteeing a fixed pension, typically 50% of the last drawn basic pay plus DA, without employee contribution.
• Dearness Allowance (DA): A cost of living adjustment allowance paid to government employees to offset inflation.
• Permanent Retirement Account Number (PRAN): A unique identification number for individuals enrolled in the National Pension System (NPS).