‘Unified Pension Scheme is new, not rollback of NPS,’ says FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman has clarified that the newly launched Unified Pension Scheme (UPS) is a new offering and not a rollback of the existing New Pension Scheme (NPS) and Old Pension Scheme (OPS), PTI reported.
The finance minister also accused the Opposition Congress party of spreading misinformation on the same.
“It is not a rollback… it is different from OPS and NPS. It is clearly a new package. UPS is better and will satisfy most government employees. It is tailored in such a fashion that every calculation fits and even the government is not burdened too much,” said Sitharaman.
She expressed hope that most of the states would adopt UPS “as it has a lot of benefits for employees”.
On allegations by the Congress that the Centre has taken a U-turn on the pension scheme, Sitharaman replied that the government has improved the pension scheme which is not a U-turn.
Senior Congress leaders have said going back on OPS would be foolhardy because of obvious challenges it posed, the report noted.
“These days Congress makes comments without doing comprehensive study, which was not the case earlier. They have just become a naara-driven or sloganeering-driven party,” she added.
Sitharaman also defended past decisions such as the restoration of indexation benefits as part of long-term capital gains tax (LTCG), terming it as “tweaking” and “not a rollback”.
Under OPS (effective before January 2004), employees got 50 per cent of their last drawn basic pay as pension. Employees, under the OPS, were not required to make any contribution. They, however, contributed to the General Provident Fund (GPF). The accumulated amount, along with interest, was paid to the employee at the time of retirement.
Under the NPS, the employer contribution is 14 per cent, and the employee contribution is 10 per cent. However, the eventual payout depends on the market returns on that corpus, mostly invested in government debt.
However, as the NPS was less attractive than the OPS, several non-BJP-ruled states decided to go back to the old pension scheme, which offered a DA-linked benefit.
This prompted the Centre to constitute a committee in April 2023, under former Finance Secretary and now Cabinet Secretary-designate T V Somanathan to suggest improvement in the NPS architecture.
Unlike the old pension scheme, UPS is contributory in nature, wherein employees will be required to contribute 10 per cent of their basic salary and dearness allowance while the employer’s contribution (the central government) will be 18.5 per cent.
(With inputs from PTI)