India Approves New Pension Scheme Guaranteeing 50% of Salary for Federal Employees

The Indian government has approved the Unified Pension Scheme (UPS) to guarantee federal government employees 50% of their base salary as a pension. Set to roll out on April 1, 2025, the scheme replaces a market-linked payout system. The financial implication is estimated at 62.5 billion rupees for the fiscal year 2024-25.

The Indian government approved a new pension scheme on Saturday that promises federal employees 50% of their base salary as a pension. This move replaces the current market-linked payout system.

Ashwini Vaishnaw, a cabinet minister, announced that the Unified Pension Scheme (UPS) will be implemented from April 1, 2025. It will ensure that government employees retiring after a minimum of 25 years of service receive 50% of their base salary from the last 12 months as their pension.

The existing National Pension Scheme requires employees to contribute 10% of their base salary and the government 14%, with the final amount tied to market returns on investments. The financial burden of the UPS is projected to be 62.5 billion rupees ($745 million) for the fiscal year 2024-25, subject to annual variations based on the number of retirees.

(With inputs from agencies.)