Good news for central government employees. The new financial year is just around the corner, kicking off on April 1, and with it comes the launch of the Integrated Pension Scheme for central employees. This new scheme is being introduced as an alternative to the National Pension System (NPS).
For central government employees already part of the NPS, they can choose to switch to this new scheme. The Finance Ministry has confirmed that those eligible under the NPS can make the switch to the Integrated Pension Scheme while still within the NPS framework.
Here’s a quick rundown of what the scheme entails:
1. Retirees will receive 50% of their average basic salary from the last year of service as a pension, provided they have served for at least 25 years. Plus, the government is bumping up its contribution from 14% to 18.5%.
2. Employees won’t see an increase in their contributions. If a pensioner passes away, their family will get 60% of the pension amount. Also, those who retire after a minimum of 10 years of service will receive a pension of Rs 10,000 per month.
3. The UPS will also apply to those who have already retired under the NPS. Any back payments from the previous period will be settled with interest at PPF rates.
4. Employees will have the option to choose UPS. This applies to current NPS/VRS members and future employees as well. Once the choice is made, it’s final.
5. The Central Government is rolling out UPS, which is set to benefit around 23 lakh central employees. If state governments decide to adopt it too, it could help over 90 lakh government employees currently under NPS.