look news india
Integrated Pension Scheme: The introduction of the Unified Pension Scheme (UPS) by the Narendra Modi government is a landmark achievement to secure the financial future of government employees and maintain the financial health of both state and central governments. This reform not only provides a reliable safety net for pensioners but also strengthens cooperative federalism, a principle that the Modi administration has consistently championed.
UPS ensures that retired employees receive 50% of their average basic salary in the last 12 months of service as pension, which provides certainty and stability.
This assurance is given without compromising on the basic principles of pension reforms laid down by former Prime Minister Atal Bihari Vajpayee – namely the nature of contributions and financing of pensions. By requiring both employees and the government to contribute to the pension fund, UPS creates a sustainable model that balances employee benefits with fiscal responsibility.
The UPS is in stark contrast to the Old Pension Scheme (OPS), which burdened state governments with temporary financial commitments. Non-NDA-led states such as Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh re-adopted the OPS, which was criticised as financially irresponsible.
Highlighting the grave implications of such a decision, the Reserve Bank of India (RBI) said the financial cost of reverting to OPS would be huge, leading to a four-fold increase in pension liabilities compared to the National Pension System (NPS).
The Modi government's UPS offers a sensible alternative that addresses the grievances of government employees and also ensures that state and central governments maintain the financial space needed for critical capital investments. By increasing the government contribution to 18.5% of the basic salary and retaining the employee contribution at 10%, the UPS bridges the gap between defined pensions and pension fund income, thereby securing the future of retirees.