Lok Sabha Question No. 3681 (UNSTARRED), answered on 2025-03-24
Subject: Implementation of Unified Pension Scheme
Ministry: FINANCE
Asked by: Shri Dharmendra Yadav

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. 3681

ANSWERED ON MONDAY, 24 MARCH, 2025/ CHAITRA 3, 1947 (SAKA)

## IMPLEMENATION OF UNIFIED PENSION SCHEME

## † 3681. Shri Dharmendra Yadav

Will the Minister of Finance be pleased to state:

- (a) the timeline for full implementation of Unified Pension Scheme (UPS) and the manner in which it is likely to impact the existing New Pension Scheme (NPS) Subscribers;
- (b) the likely long-term financial viability for UPS in comparison to NPS for the Government;
- (c) the difference between investment flexibility in NPS and UPS;
- (d) whether the Government has identified the problems of NPS and if so, the details thereof; and
- (e) whether the UPS will resolve the above problems, if so, the details thereof?

## ANSWER

## MINISTER OF STATE FOR FINANCE

## (SHRI PANKAJ CHAUDHARY)

(a) Unified Pension Scheme (UPS) has been notified by the Government on 24.01.2025, as an option under National Pension System (NPS) with the objective of providing assured monthly payout after retirement to the Central Government employees covered under the NPS.  The UPS has been envisaged to address  the  demand  of  the  employees  covered  under  National Pension  System  (NPS)  regarding  assured  pension  after  retirement  while  ensuring  fiscally responsible funded and contributory pension scheme.

(b) UPS is defined contribution scheme with elements of defined benefit. It relies on the regular and timely accumulation and investment of applicable contributions (from both the employee and the employer) for assured payout to the employees. The monthly contribution of the UPS subscriber shall be ten percent of the basic pay and dearness allowance matched by the Central Government by crediting an equal amount, to the individual PRAN of the UPS subscriber. The Central  Government shall also  make  additional  contribution  at  an  estimated  eight  and  half percent of basic pay plus dearness allowance of all employees who opt the UPS, to the pool corpus on aggregate basis. The additional contribution is for supporting assured payouts under the Unified Pension Scheme to ensure long-term financial viability of UPS.

(c) Presently, Central Government subscribers are allowed to choose any of the pension funds registered  with  PFRDA  and  exercise  investment  options  from  (a)  100%  investments  in Government  securities;  (b)  Conservative  Life  Cycle  fund  with  maximum  equity  exposure capped to 25%; (c) Moderate Life Cycle fund with maximum equity exposure capped to 50%; and (d) Default scheme.

Under UPS, the employee can exercise investment choices for the individual corpus alone. Such investment choices shall be regulated by the Pension Fund Regulatory and Development Authority. If an employee does not exercise an investment choice on individual corpus, the 'default pattern' of investment will apply. The investment decisions for the pool corpus built through the additional Central Government contribution solely rests with Central Government.

(d)  & (e) NPS is a defined contribution-based scheme with market linked returns for postretirement benefits.  An NPS review committee was constituted to suggest measures as are appropriate  to  modify  the  NPS  with  a  view  of  improving  upon  the  pensionary  benefits  of Government employees covered under NPS, keeping in view the fiscal implications and impact on  overall  budgetary  space,  so  that  fiscal  prudence  is  maintained  to  protect  the  common citizens. UPS is a defined contribution-based schemes with elements of defined benefit which addresses the concerns regarding assured payout after retirement.

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