Unified Pension Scheme will not be rolled back, says government official in response to trade union demand

New Delhi: There will be no rollback of the new Unified Pension Scheme (UPS) for central government employees, a senior government official said on Tuesday.

Trade unions have been demanding the rollback of employee contributions to the UPS, which combines benefits of the Old Pension Scheme (OPS) and National Pension Scheme (NPS), providing assured pensions indexed to inflation, family pensions, and minimum pensions.

"One must understand that a U-turn is when you revert to the original position. In our case, we haven't done a U-turn with our major policies. There will be no U-turn with the new pension system," the official said under the condition of anonymity.

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The UPS was approved last Saturday by the Union Cabinet. Effective 1 April 2025, it will provide assured pension to 2.3 million government employees. 

"If we were to roll back the new central government's pension system, we would have reverted to the NPS. But, there will be no rollback," the official said.

“The Centre will reach out to states only on their request but the new pension system will not be marketed to the states. This is a pension for central government employees, which is different from the pension system of the state government and the private sector.”

‘UPS an upgrade of existing NPS’

The UPS can be seen as an upgrade of the existing NPS for government employees, who will continue contributing 10% of their income to the scheme. However, the government's contribution has increased to 18.5%, against 14% currently.

The new system provides subscribers an assured pension, inflation indexation and family pension.

Meanwhile, no major decision on tax rate rationalization is expected in the upcoming GST Council Meeting, slated to be held in New Delhi on 9 September, the official mentioned above said.

Also Read: Unified Pension Scheme: A suitable compromise for pensioners?

"The Officers Committee will carry out a detailed status report, which will be discussed by the ministers in the GoM (Group of Ministers) meeting. Then the issues will be put forward before the GST Council," the person said.

“So, there will be no decision expected on the current status (of the GST) in the upcoming GST Council Meeting.”

The person said states don't want to reduce rates item-by-item as revenue remains their priority.

“The job of state finance ministers is to protect the revenue.”

The 53rd GST Council meeting held on 22 June, which was chaired by financde minister Nirmala Sitharaman and attended by state finance ministers, focused on tax amendments, Aadhaar biometric integration, and exemptions in railway services. 

Further, a uniform GST rate of 12% was announced for all milk cans, regardless of whether they are made of steel, iron, or aluminium.