The central government launched the old pension scheme and the Unified Pension Scheme in place of NPS. But it is not getting good response from the central employees. People are going away from this scheme by saying that there is less profit than the old pension scheme, the result of which is that out of a total of 27 lakh employees, only 1 percent have accepted it. Let us understand why employees are not adopting UPS.
The UPS was announced in April 2024 in response to the demand of restoring the old pension scheme (OPS) by a section of employees and opposition parties, which was brought to the place of National Pension System (NPS) in 2004. Under UPS, the employee has to contribute 10% and the government 18.5%. It provides a guaranteed pension of 50% of the average of the original salary of 12 months before retirement to employees with 25 years or more services. This pension is completely associated with inflation. Employees with 10 years or more services are paid a minimum of Rs 10,000 per month pension. On the death of pensioners, 60% of the last drone pension is given to their family. The government promoted this scheme a lot, but very few people have been able to join it.
Why are people not joining?
However, due to long service duration in UPS, monthly contribution, limited benefits in retirement situation, and disjunction for family pension for limited definition, only about 1% of the 27 lakh Central Government Employees selected UPS. People are refraining from choosing it due to the lack of clearance of the benefits of the benefits, taxation and UPS before the death during the service. Because once selected, one cannot go out of it. However, for this, the government has recently given the option of OneTime One Way Switch, but it has its own limits.
Government taken steps for UPS
In July, the Center extended the income tax benefits received under the market-linked NPS to UPS, which includes a tax-free with 60% fund tax on retirement. It also improved OPS benefits in Government Employees’ death, disability or disability situation. The Center also gave an employee of retirement gratuity and death gratuity under UPS. It increased the deadline of switching from NPS to UPS from June 30 to September 30. Last week, it started one-time one-way switch facility from UPS to NPS. Employees choosing UPS can use it until one year before retirement or three months before retirement date in a volunt retirement case.
Fiscal implication in UPS
UPS has been designed in such a way that it does not affect the government finance. Due to the guarantee element, the estimate of the extra experience was only Rs 8,500 crore in Financial Year 26, which will increase gradually with time, as salary scales are revised and join in New Peepal service.
However, in the number of employees, General Control is expected to be controlled by the general control on new additions. Since, after 2036 people will retire under UPS and some of them can also have a death of family pensioners. In such a situation, his pension capital amount will not be returned to the employee of the employee. This will help in improving the resources of the government for pension without being more dependent on the budget in the future. Basic pension will not be resetted after the decision of every pay commission, as was in OPS.