Editor's Pick | Assured pensions return as govt unveils new scheme

On August 24, the Centre unveiled a new ‘Unified Pension Scheme’ (UPS), similar in essentials to the Old Pension Scheme (OPS), assuring government employees of 50% of their last drawn pay as a lifelong monthly benefit. The move reverses a 21-year-old measure to reform India’s civil services pension system, brought in by the Atal Bihari Vajpayee government. The UPS received the Union Cabinet’s approval on Saturday and will kick in from April 1, 2025. The new scheme gives officials a periodic dearness relief hike in keeping with inflation trends. It also offers a family pension equivalent to 60% of a government worker’s pension in the case of their demise, and a lumpsum superannuation payout in addition to gratuity benefits at the time of retirement. Additionally, a minimum pension of ₹10,000 a month has been promised for those who complete at least 10 years of Central government service. A committee under the former Finance Secretary and Cabinet Secretary-designate T.V. Somanathan had been set up in March 2023 to review the National Pension System (NPS) — earlier known as the New Pension Scheme— for government employees so as to balance “their aspirations with fiscal prudence.” At the time, five non-BJP-ruled States had moved their employees out of the NPS back to the OPS, guaranteeing a pension at 50% of salary. Under the NPS, which was applicable for employees joining government service on or after January 1, 2004, pension payouts were linked to the accumulated value of contributions made by the government and the employee over the course of employment. These contributions were invested in equities and other market-linked securities by fund managers regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Under the new scheme, employees will chip in 10% of their salary and the government contributes 18.5% of salary. While employee contribution would be frozen at 10%, the government’s contributions may be adjusted based on periodic actuarial assessments. Mr. Somanathan noted that a key difference between the OPS and the UPS was that the liabilities under OPS were unfunded and entailed no contributions from employees or the employer. The NPS will still remain as an option. Those joining service post 2004, including retirees, have been offered the option of switching over to the UPS. Employees have also been promised a lumpsum payment equivalent to a tenth of monthly emoluments (pay plus Dearness Allowance) for every completed six months of service. This is in addition to gratuity benefits at the time of retirement. The Hindu’s Profiles Paetongtarn Shinawatra | Rise of the scion To Lam | The security tsar The Hindu’s Daily Quiz Protesters in Bangladesh blamed India for the floods, but the Ministry of External Affairs denied that the floods were caused by the opening of a dam in Tripura. Name the dam. Khuga Khandong Dumbur Tuirial To know the answer and to play the full quiz, click here. [logo] Editor's Pick 25 August 2024 [The Hindu logo] [EP Logo] Editor's Pick 25 August 2024 In the Editor's Pick newsletter, The Hindu explains why a story was important enough to be carried on the front page of today's edition of our newspaper. [View in browser]( [More newsletters]( Assured pensions return as govt unveils new scheme On August 24, [the Centre unveiled a new ‘Unified Pension Scheme’ (UPS)]( similar in essentials to the Old Pension Scheme (OPS), assuring government employees of 50% of their last drawn pay as a lifelong monthly benefit. The move reverses a 21-year-old measure to reform India’s civil services pension system, brought in by the Atal Bihari Vajpayee government. [The UPS received the Union Cabinet’s approval]( on Saturday and will kick in from April 1, 2025. The new scheme gives officials a periodic dearness relief hike in keeping with inflation trends. It also offers a family pension equivalent to 60% of a government worker’s pension in the case of their demise, and a lumpsum superannuation payout in addition to gratuity benefits at the time of retirement. Additionally, a minimum pension of ₹10,000 a month has been promised for those who complete at least 10 years of Central government service. A committee under the former Finance Secretary and Cabinet Secretary-designate T.V. Somanathan had been set up in March 2023 [to review the National Pension System (NPS)]( — earlier known as the New Pension Scheme— for government employees so as to balance “their aspirations with fiscal prudence.” At the time, five non-BJP-ruled States had moved their employees out of the NPS back to the OPS, guaranteeing a pension at 50% of salary. Under the NPS, which was applicable for employees joining government service on or after January 1, 2004, pension payouts were linked to the accumulated value of contributions made by the government and the employee over the course of employment. These contributions were invested in equities and other market-linked securities by fund managers regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Under the new scheme, employees will chip in 10% of their salary and the government contributes 18.5% of salary. While employee contribution would be frozen at 10%, the government’s contributions may be adjusted based on periodic actuarial assessments. Mr. Somanathan noted that a key difference between the OPS and the UPS was that the liabilities under OPS were unfunded and entailed no contributions from employees or the employer. The NPS will still remain as an option. Those joining service post 2004, including retirees, have been offered the option of switching over to the UPS. Employees have also been promised a lumpsum payment equivalent to a tenth of monthly emoluments (pay plus Dearness Allowance) for every completed six months of service. This is in addition to gratuity benefits at the time of retirement. The Hindu’s Profiles [Arrow][Paetongtarn Shinawatra | Rise of the scion]( [Arrow][To Lam | The security tsar]( The Hindu’s Daily Quiz Protesters in Bangladesh blamed India for the floods, but the Ministry of External Affairs denied that the floods were caused by the opening of a dam in Tripura. Name the dam. - Khuga - Khandong - Dumbur - Tuirial To know the answer and to play the full quiz, [click here](. 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