Unified Pension Scheme Funding

March 12, 2025

The Government of India is advancing ₹7,000 crore for the Unified Pension Scheme (UPS). This funding is part of a larger proposal for over ₹51,000 crore in additional expenditures. The UPS is designed to provide assured retirement payouts for Central government employees. The scheme will commence on April 1, 2025, benefiting around 23 lakh employees.

Overview of the Unified Pension Scheme

The Unified Pension Scheme is an option under the National Pension System (NPS). It aims to ensure a reliable monthly payout after retirement. The scheme is fund-based, meaning it relies on consistent contributions from both employees and the government. This approach allows for the effective accumulation and investment of funds.

Financial Implications of the UPS

The government anticipates an initial outlay of ₹6,250 crore for the first year of the UPS. Additionally, ₹800 crore will cover arrears in the same year. The upfront funding of ₹7,000 crore addresses the government’s anticipated liabilities for the first year of the scheme.

Supplementary Demands for Grants

The government has requested Parliament’s approval for a net additional expenditure of ₹51,462.86 crore for the current financial year. This includes allocations for pensions and fertilizer subsidies. The total gross expenditure sought exceeds ₹6.78 lakh crore, with savings and receipts expected to offset much of this cost.

Allocation Breakdown

The additional allocations include ₹14,100 crore for fertilizer subsidies and ₹13,449 crore for government employee pensions. The UPS funding is part of this pension allocation. There are also provisions for defence pensions and additional funds for agriculture and Jammu & Kashmir.

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