August 24th 2024.
On Saturday, the Union Cabinet approved a significant decision that will impact 23 lakh government employees. The decision entails providing a guaranteed 50 per cent of salary as pension for those who joined service under the National Pension System. This system is applicable for government employees who joined after April 1, 2004. It was implemented with the concept of contribution-based pension, as opposed to the defined benefit system for employees who joined prior to the NPS.
During the announcement of the Cabinet decisions, Information and Broadcasting Minister Ashwini Vaishnaw stated that the Unified Pension Scheme will now offer government employees the opportunity to receive 50 per cent of their average basic pay from the last 12 months before their superannuation as pension. This means that after completing 25 years of service, an employee will be eligible for full pension or 50 per cent of their pay. However, for those with a shorter service period, the pension will be proportionate, but not less than 10 years of service.
Furthermore, NPS subscribers will now have the option to choose the Unified Pension Scheme, which guarantees a pension from the beginning of the next financial year. Last year, the finance ministry formed a committee under Finance Secretary TV Somanathan to review the pension scheme for government employees and suggest any necessary changes, keeping in mind the existing framework and structure of the National Pension System.
In light of this decision, several states not ruled by the BJP have also decided to revert to the DA-linked Old Pension Scheme. Additionally, employee organizations in certain states have also raised demands for the same. In a media briefing, Cabinet Secretary-designate TV Somanathan shared that the new scheme will be effective from April 1, 2025. The benefits of the Unified Pension Scheme will apply to those who retired or will be retiring until March 31, 2025, with arrears. This is a significant step towards ensuring the well-being and financial stability of government employees.
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