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The recent introduction of the Unified Pension Scheme (UPS) has sparked a political debate, with the Finance Minister, Nirmala Sitharaman, vehemently denying claims by the Congress party that it represents a rollback of the National Pension System (NPS). Sitharaman maintains that the UPS is a new scheme designed to address the concerns of government employees regarding the NPS, which came into effect in 2004. She insists that the UPS is superior to the old pension scheme (OPS) and the NPS, offering benefits that cater to the needs of most government employees.
The UPS guarantees employees a pension equivalent to 50% of their average basic pay over the last 12 months before retirement, provided they have served for at least 25 years. For those with shorter service periods, the pension is calculated proportionally, with a minimum assured pension of ₹10,000 per month after 10 years of service. This contrasts with the NPS, where the payout is contingent upon market returns on the employee’s corpus, which is primarily invested in government debt. The UPS is also contributory, requiring employees to contribute 10% of their basic salary and dearness allowance, while the government contributes 18.5% – a higher employer contribution than the 14% under the NPS.
Congress leaders have criticized the UPS as a U-turn, citing the challenges associated with reverting to an old-fashioned pension scheme. Sitharaman, however, defends the UPS as an improvement on the existing pension system, not a rollback. She accuses Congress of lacking comprehensive understanding and resorting to slogans without proper research. This political tug-of-war highlights the differing perspectives on pension reforms and the role of the government in providing social security for its employees. The UPS, while aiming to address the concerns of government employees, has become a point of contention in the political arena, with both sides engaging in fervent arguments to sway public opinion.
Source: UPS a new scheme, not rollback of NPS as claimed by Congress: Nirmala Sitharaman