Unified Pension Scheme: The political consideration behind govt's big move

PM Modi

Amid the growing demand for the rollback of the Old Pension Scheme, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved a new assured pension scheme providing 50% of salary for those who joined the service after January 1, 2004.

The saffron party's targeted political gains from government employees by offering a Unified Pension Scheme (UPS) that includes a 50% salary as pension and inflation adjustment, countering the Congress's promise of a return to the unfunded Old Pension Scheme (OPS), surely cannot be missed with  multiple states headed to the polls in the next few months, according to news report by ToI.

According to the report, recently some government employees were influenced by Congress's OPS promise, particularly in Himachal Pradesh.

The UPS, approved by the Union Cabinet on Saturday (August 24, 2024), also assures officials a periodic dearness relief hike in line with inflation trends, a family pension equivalent to 60% of a government worker’s pension in the case of their demise, and a lumpsum superannuation payout in addition to gratuity benefits at the time of retirement. Besides, a minimum pension of ₹10,000 a month has been promised for those who complete at least 10 years of central government service

With the announcement of a Unified Pension Scheme, the govt has reversed a 21-year-old reform of India’s civil services pension system boldly brought in by the Atal Bihari Vajpayee government, unveiling what it called a new ‘Unified Pension Scheme’ (UPS) that is virtually akin to the Old Pension Scheme, and assures government employees 50% of their last drawn pay as a lifelong monthly benefit.

Government cadres have traditionally been a solid vote bank for the BJP, especially in Delhi, where elections are imminent in February. However, the demand for restoring OPS was leveraged by Congress in recent state elections to challenge the BJP.

This tactic appeared effective in Himachal Pradesh, a state where government employees have significant influence. Despite this, BJP managed to win both Lok Sabha and assembly polls in Madhya Pradesh without much damage from the OPS issue.

The decision to implement the UPS took nearly 18 months to finalize and was strategically announced before the assembly elections.

The saffron party plans to counteract Congress's OPS narrative by presenting the UPS as a more sustainable option. While Congress had vocally supported OPS in earlier assembly polls, their stance softened after electoral losses in Rajasthan, Madhya Pradesh, and Chhattisgarh, with no mention of OPS in their Lok Sabha poll manifesto.