Unified Pension Scheme
Kartavya Desk Staff
Source: ToI
Context: The Pension Fund Regulatory and Development Authority (PFRDA) has issued guidelines for the implementation of the Unified Pension Scheme (UPS), which will come into effect from April 1, 2025, offering an alternative to the existing National Pension Scheme (NPS) for central government employees.
About Unified Pension Scheme (UPS):
• What it is:
• A contributory pension scheme for central government employees providing guaranteed monthly payouts and flexible investment options.
• Announced in: January 2025 via official government notification.
• Implemented from: April 1, 2025.
• Implementing Agency: Pension Fund Regulatory and Development Authority (PFRDA).
Key Features of UPS:
• Eligibility:
• Central government employees in service as of April 1, 2025, already under NPS. New central government recruits joining on or after April 1, 2025 (option within 30 days). Retired or voluntarily retired employees under NPS as of March 31, 2025. Legally wedded spouse of eligible deceased retirees.
• Central government employees in service as of April 1, 2025, already under NPS.
• New central government recruits joining on or after April 1, 2025 (option within 30 days).
• Retired or voluntarily retired employees under NPS as of March 31, 2025.
• Legally wedded spouse of eligible deceased retirees.
• Choice and Irrevocability:
• Option once exercised is final and irreversible. Decision must be made within three months from April 1, 2025.
• Option once exercised is final and irreversible.
• Decision must be made within three months from April 1, 2025.
• Contribution Requirement:
• Employee contribution: 10% of basic pay + dearness allowance. Government contribution: 10% match + additional 8.5% to ensure guaranteed payout.
• Employee contribution: 10% of basic pay + dearness allowance.
• Government contribution: 10% match + additional 8.5% to ensure guaranteed payout.
• Guaranteed Assured Payout:
• Minimum assured payout of ₹10,000/month after 10 years of qualifying service. Full payout calculated as 50% of 12-month average basic pay before retirement (subject to 25 years of service).
• Minimum assured payout of ₹10,000/month after 10 years of qualifying service.
• Full payout calculated as 50% of 12-month average basic pay before retirement (subject to 25 years of service).
• Other features: PRAN Number Continuation from NPS: The Permanent Retirement Account Number (PRAN) issued under the NPS continues to be used without any changes. Subscribers do not need a new PRAN for this scheme. Choice of Pension Funds: Subscribers can select their preferred pension fund managers from the list of PFRDA-registered pension funds. Investment Change Flexibility: Subscribers are allowed to change their investment choice (pension fund or asset allocation) once per financial year. Additionally, they can adjust their portfolio allocation (switching between asset classes) up to two times in a financial year. Partial Withdrawal Facility: Subscribers can withdraw up to 60% of the accumulated pension corpusupon exit or retirement.
• PRAN Number Continuation from NPS: The Permanent Retirement Account Number (PRAN) issued under the NPS continues to be used without any changes. Subscribers do not need a new PRAN for this scheme.
• Choice of Pension Funds: Subscribers can select their preferred pension fund managers from the list of PFRDA-registered pension funds.
• Investment Change Flexibility: Subscribers are allowed to change their investment choice (pension fund or asset allocation) once per financial year. Additionally, they can adjust their portfolio allocation (switching between asset classes) up to two times in a financial year.
• Additionally, they can adjust their portfolio allocation (switching between asset classes) up to two times in a financial year.
• Partial Withdrawal Facility: Subscribers can withdraw up to 60% of the accumulated pension corpusupon exit or retirement.