If basic salary is revised as per 8th Pay commission, minimum pension amount can also be revised as per Unified Pension Scheme.
8th Pay Commission: The Centre recently announced the Unified Pension Scheme (UPS) as an alternative to the National Pension System (NPS), set to be implemented from April 1, 2025. Central government employees have long demanded for the restoration of the Old Pension Scheme (OPS), which was replaced by the NPS in 2004.
The demand for reinstating OPS and scrapping NPS has been done by various employee unions since then. Like OPS, the UPS also guarantees a pension, providing 50% of the average basic pay from the last 12 months before retirement.
Additionally, the scheme ensures a minimum pension of Rs 10,000 for retirees with at least 10 years of service. In case of a pensioner’s death, the spouse will receive 60% of the pension. For full pension eligibility, employees must complete at least 25 years of service. Those who will serve less than 25 years will receive a pension on a pro-rata basis.
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8th Pay Commission: Pension Calculation (Projected under UPS)
Under the 7th Pay Commission, the current minimum pension is Rs 9,000, linked to the minimum basic pay of Rs 18,000. However, after the 8th Pay Commission, expected in 2026, the minimum basic salary is projected to rise to Rs 34,560, considering a fitment factor of 1.92.
Accordingly, the minimum UPS pension for those with 25 years of service can be projected as Rs 17,280, according to the Financial Express report. The pension will be based on the average basic pay over the last 12 months, and any changes in minimum pay due to DA merger or other adjustments will change the pension amount.
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Unified Pension Scheme: Important Dates
The new pension scheme will be effective from April 1, 2025. Also, the existing central government NPS subscribers will also be given the option to switch to UPS.
While launching UPS, Union Minister Ashwini Vaishnaw said “The Union Cabinet has approved Unified Pension Scheme (UPS) for government employees providing for the assured pension…50% assured pension is the first pillar of the scheme…second pillar will be assured family pension…About 23 lakh employees of the central government would benefit from the Unified Pension Scheme (UPS)…There will be an option for the employees to opt between NPS and UPS…”‘
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