Unified Pension Scheme: The Unified Pension Scheme recently brought in by the Centre has drawn a lot of attention in many states, including Uttar Pradesh. The scheme thus aims at providing all-inclusive pension benefits to the employees and has been welcomed by the CM Yogi Adityanath. After Implementation about 17 lakh employees in Uttar Pradesh would benefit under the scheme.
What is Unified Pension Scheme
The understanding of UPS is, in simple terms, for the first time, a serious step is being initiated in the realm of employee pensions. While the present NPS guarantees no minimum pension, the UPS would guarantee a certain percentage of the employee’s average basic salary in the last 12 months of service as guaranteed pension. As the existing structure of the UPS, an employee would be entitled to receive 50% of average basic salary as pension upon completion of 25 years of service. A family pension, which is essentially 60% of the employee’s pension after the life of the employee, is another aspect of this scheme. For those employees serving at least 10 years, there would be a guarantee for a minimum pension of ₹10,000 per month.
Current Pension Scenario in UP
Presently, employees in UP recruited after 2005 are included under the NPS. The NPS was implemented by the Atal Bihari Vajpayee government in the year 2004 replacing the OPS. It ensures the employees’ contribution to the pension fund, 60% of the corpus at the discretion of the employee for withdrawal at the time of retirement, and 40% to finance a pension, would cause minimum financial stress to the Government. However, NPS had always been opposed as strongly by the employees on account of market-linked returns, thereby generating fluctuations in pension amounts and without a guaranteed fixed pension.
Key Differences Between UPS and NPS
UPS is a landmark shift from the NPS in terms of stability and benefits. While the latter links pension amount to market performance, UPS ensures a fixed pension. Under UPS, the government thus contributes 18.5% of the total contribution, a higher percentage than the 14% contribution by the government in NPS. Providing more financial stability, pensions under the UPS are also indexed with the inflation rate. Further, the UPS provides for family pensions and a minimum guaranteed pension, a feature not provided under the NPS.
Implementation of UPS in Uttar Pradesh
Presently, the UP government is considering the scheme of the central government. The process, in principle, is waiting for the formal orders from the Centre, which then has to be followed by a detailed study of the Finance Department that will assess the financial implications of implementing UPS. After this, it would go to the state government for appraisal and a final decision at the cabinet level. Though Chief Minister Yogi Adityanath had lauded the scheme, implementation would be done after these assessments and procedural clearances.
Political and Public Responses
The announcement and launching of UPS has been a subject of political discussion, where the people from opposition parties, along with employees’ unions have varied kinds of comments. For a majority of employees, especially those against NPS, UPS is a much-waited relief and a step to set right the wrong initiated by government against pensionery inequalities. The political leaders on their part are more concerned with methodology of the government in implementing UPS with feasibility. The entire exercise is part of the ongoing pension reforms.
