Centre finalising details of UPS scheme, will announce launch soon

The new scheme has features of both the New Pension Scheme and the Old Pension Scheme

The government is finalising the details of the Unified Pension Scheme (UPS) and will soon come out with the final version, M Nagaraju, secretary, Department of Financial Services said on September 18.

The scheme was cleared by the Union Cabinet last month based on the recommendations of the Committee headed by the finance secretary.

The new scheme has features of both the New Pension Scheme (NPS) and the Old Pension Scheme (OPS), as it continues with the contributory model, but also assures a minimum payout of 50 percent of average basic pay as pension to central government employees. It is to be applicable from April 1, 2025, but will also have some retrospective application for those who have retired under OPS.

Speaking at the launch of NPS Vatsalya, pension programme for kids, finance minister Nirmala Sitharaman noted that the UPS scheme balances the demands of current generation without financially straining the future generation.

“UPS takes care of government employee interest and takes care of taxpayer interest, so that there is no overburdening future generation. I have to be conscious so that younger generation doesn't pay for future burden,” Sitharaman said.

The government will also have to finalise the specifics for the NPS Vatsalya scheme which it launched on September 18.

While the scheme provides for an NPS type of structure for kids below 18 years old, the government is yet to take a call on exit options under the plan.

“The government is still deciding on suggestions pertaining to the exit option of the NPS Vatsalya Scheme,” Nagaraju said.

“We will try to improve NPS Vatsalya and make it more receptive to the population,” the DFS secretary further noted.

The NPS Vatsalya can be transferred to NPS account. It offers all the same kind of investment options that are being offered by NPS.

Extolling the progress made by NPS, the finance minister noted that private sector has taken to the NPS as well.

“NPS in the last 10 years has grown at the CAGR of 37 percent. NPS for private sector has grown much faster over the last four years at 25 percent compared with 8 percent growth for the government,” she further noted.