The Modi administration has recently paved the way for the establishment of the 8th Pay Commission, which will impact the salaries of central government employees. Additionally, there will be an enhancement in the pensions of retired personnel. Union Minister Ashwini Vaishnav announced the formation of this commission on January 16, ahead of Budget 2025, stating that its recommendations would take effect from January 1, 2026.
Currently, salaries and pensions are determined by the 7th Pay Commission, which has been in effect since January 1, 2016. Following the announcement of the 8th Pay Commission, central employees are particularly focused on the Unified Pension Scheme (UPS).
The 8th Pay Commission is anticipated to introduce significant reforms in pensions under both the National Pension System (NPS) and the Unified Pension Scheme (UPS), which is set to commence on April 1, 2025. This new scheme will incorporate advantages from both the Old Pension Scheme (OPS) and the NPS, offering features such as family pensions, a guaranteed pension amount, and a minimum pension for all central employees.
What is UPS and how will it be put into effect?
The UPS is a retirement plan that integrates the most advantageous elements of the previous pension scheme and the National Pension System (NPS). It aims to provide government employees with a reliable benefit upon retirement. Key features include a family pension, a guaranteed pension amount, and a minimum pension for all central government employees. The implementation of UPS is anticipated to commence on April 1, 2025.
Under this scheme, the minimum pension will be set at Rs 10,000 per month, applicable to employees who have served a minimum of 10 years by the time of their retirement. In the event of the pensioner’s death, the family will receive 60% of the pension amount, which will be equivalent to what the pensioner was receiving at the time of their passing.
What will the pay matrix look like under UPS in the 8th Pay Commission?
With the introduction of a fitment factor of 2.86, the minimum basic salary for central employees is projected to rise from Rs 18,000 to Rs 51,480, representing a significant increase.
What is the expected minimum pension under UPS in the 8th Pay Commission?
A substantial increase in pension is also anticipated, potentially rising from the current Rs 9,000 to a range between Rs 17,280 and Rs 25,740, contingent upon the final fitment factor.