Deadline for opting Unified Pension Scheme extended to this date
What's the story
The Pension Fund Regulatory and Development Authority (PFRDA) has said eligible central government employees can choose the Unified Pension Scheme (UPS) till June 30.
The scheme, which will start on April 1, offers a comprehensive package of five key benefits: assured pension, family pension, minimum pension, inflation indexation, and lump sum payment at superannuation.
It is meant for those who joined service on or after January 1, 2004 or those joining now.
Switching options
UPS offers one-time switch from NPS to new scheme
PFRDA has released a notification explaining the operational rules of the scheme and its eligibility criteria.
Eligible employees can switch from the National Pension System (NPS) to the UPS, but only once.
The PFRDA notification specifies that this option has to be exercised within three months from April 1, 2025.
New employees joining on or after April 1 will get a month to make their choice.
Once selected, the decision is final and cannot be changed.
Government contribution
A new pension scheme with enhanced government contribution
The UPS brings an enhanced government contribution of 18.5%, up from the earlier 14%. However, employee contributions remain the same at 10% of basic pay plus dearness allowance (DA).
The total pension corpus will be split between two funds: an individual pension fund and a separate pool corpus.
The individual fund will comprise both employee and matching government contributions, while the pool corpus will only have additional government contributions.
Fund management
UPS: A fund-based system for assured payouts
The UPS works on a 'fund-based' model, depending on timely accumulation and investment of contributions from the employee and employer.
Timely payouts under the scheme are ensured by having enough funds in individual and pool corpus.
UPS subscribers can select their pension fund and investment pattern, including a default option.
They can invest in government securities or two variants of life cycle-based schemes with different equity exposure limits.