UPS Is A New Package, Not A Rollback, Says Nirmala Sitharaman

The UPS, which has been approved by the Union Cabinet, is set to benefit 23 lakh central government employees currently enrolled in the NPS

FM Nirmala Sitharaman expressed confidence that most states would adopt the UPS, highlighting its numerous benefits for employees

Source : PTI

UPS: Finance Minister Nirmala Sitharaman dismissed Congress' accusations of misinformation, stating that the recently introduced Unified Pension Scheme (UPS) is a new initiative, not a rollback of the National Pension System (NPS). "It is not a rollback... it is different from OPS (Old Pension Scheme) and NPS. It is clearly a new package," she asserted, highlighting that the UPS is designed to be more beneficial for government employees while ensuring minimal financial strain on the government.

The minister expressed confidence that most states would adopt the UPS, highlighting its numerous benefits for employees. She criticised Congress for alleging a U-turn by the government, explaining that the scheme represents an improvement rather than a reversal of previous policies.

In response to Congress' concerns that reverting to the OPS would be unwise, Sitharaman accused the opposition party of making statements without proper analysis, contrasting this with Congress' earlier, more thoughtful approach. She defended past policy adjustments, such as the restoration of indexation benefits in long-term capital gains tax (LTCG), as necessary tweaks rather than rollbacks.

The UPS, which has been approved by the Union Cabinet, is set to benefit 23 lakh central government employees currently enrolled in the NPS. The scheme guarantees 50 per cent of an employee's average basic pay over the last 12 months before retirement, provided they have served for a minimum of 25 years. For those with a service period as short as 10 years, a minimum assured pension of Rs 10,000 per month will be provided.

The UPS was introduced to address concerns about the NPS, which has been in effect since January 1, 2004. Unlike the OPS, which offered a 50 per cent pension of the last drawn basic pay without requiring employee contributions, the UPS is contributory.

Employees will contribute 10 percent of their basic salary and dearness allowance, while the central government's contribution will be 18.5 per cent, compared to the 14 per cent under the NPS. The new scheme's pension payouts are guaranteed, unlike the NPS, where payouts depend on market returns.

This move comes after several non-BJP-ruled states reverted to the OPS due to the perceived shortcomings of the NPS. In response, the central government formed a committee in April 2023 to suggest improvements to the NPS architecture. The approval of the UPS by the Union Cabinet on August 24 is seen as a strategic decision, addressing the long-standing demands of government employees ahead of upcoming assembly elections in Haryana and Jammu and Kashmir.