Mumbai, August 26, 2024 – In a historic move, the Maharashtra government has become the first state in India to implement the Unified Pension Scheme (UPS) for its state government employees. This decision was made by the Maharashtra cabinet on Sunday, just a day after the Union government, led by Prime Minister Narendra Modi, approved the UPS for central government employees who joined service after January 1, 2004.
According to the cabinet’s resolution, the UPS will be retroactively effective from March 2024, benefiting all state government employees. This scheme represents a significant shift in the pension system, offering enhanced benefits over the existing National Pension Scheme (NPS).
What is the Unified Pension Scheme (UPS)?
The UPS is designed to provide employees who were previously under the NPS with an assured pension. Specifically, those who opt for the UPS will receive 50% of their average basic pay from the last 12 months of their service as a pension, provided they have completed a minimum qualifying service of 25 years.
Starting from April 1, 2025, the UPS will also increase the government’s contribution to employee pensions from the current 14% to 18.5%. This adjustment is expected to add an annual financial burden of approximately ₹6,250 crore on the government, as announced by Union Minister Ashwini Vaishnaw following the Cabinet meeting.
Vaishnaw emphasized that the UPS marks a departure from the NPS, which relied entirely on the contributions made by employees and the government, without guaranteeing a fixed pension amount.
Despite the increased government contribution under the UPS, the employees’ contribution will remain at 10% of their basic salary. Additionally, an arrear of ₹800 crore will be paid to employees retiring before March 31, 2025, under the NPS. Retirees who choose to switch to the UPS will be eligible to receive these arrears.
This landmark decision by Maharashtra comes amid ongoing debates and demands from several non-BJP states to revert to the Dearness Allowance (DA)-linked Old Pension Scheme (OPS). The adoption of the UPS by Maharashtra is expected to influence other states as they consider similar reforms in response to growing calls from employee organizations for more secure pension benefits.
