A section of Central government employees has sought certain modifications to the Unified Pension Scheme, including immediate pension for central paramilitary force personnel who retire early and the return of pension corpus for staff quitting service before completing 10 years of service, sources said.
Similarly, they also expressed concern over the lack of any provision under the UPS for pension monies for the dependent children of single parents. Given the changes in familial structures, the staff seek the inclusion of children of single parents for pension.
These are among the issues being taken up by the Joint Consultative Machinery for employees with the Central government, sources said.
Given the tepid response to the UPS, which was rolled out for switching from the market-linked National Pension System (NPS) on April 1 for three months, the Centre recently extended the deadline for exercising the option for staff by another three months or till September 30.
Of the 2.7 million central government employees enrolled under NPS, just around 1% have switched to UPS so far. Central paramilitary forces account for around 30% of the central government staff under NPS.
UPS provides an assured pension of 50% of the last drawn salary (average basic pay of the last 12 months of service) upon superannuation for all employees completing a minimum of 25 years of service, with the value of such deferred compensation fully indexed to inflation. Staff are eligible for pension after turning 60. Besides, there will be assured payouts to the spouse of the pensioner after his/ her demise at 60% of the last pension drawn. Also, all employees with a minimum of 10 years of service will get an assured pension of Rs 10,000 per month.
According to the extant NPS norms, a maximum of 60% of the accumulated NPS corpus from contributions during a person’s working years is allowed to be withdrawn tax-free at the time of retirement. The subscriber has to invest a minimum of 40% of the corpus in annuities for a regular pension, which is not guaranteed.
Under NPS, central armed police forces (CAPF) could take the voluntary retirement scheme (VRS) after 20 years in service and yet get immediate pension immediately by investing 80% of their corpus in annuities. In contrast, these staff could take VRS after 25 years in service under UPS, but their pension will start after they turn 60 years
“This is a big dampener for CAPF personnel, who are reluctant to opt for UPS,” one of the officials said.
Similarly, the government staff would not receive any pension if they resign before ten years of service under UPS.
Under UPS, the employee contribution is 10% (of basic pay + DA). The government’s contribution has been raised from the present 14% (under the market-linked NPS) to 18.5%. “In case of such resignations, employees should get back the corpus built for their contribution, if not the government contribution,” a government employee said.
Under NPS, the staff resigning from service could use 80% of their corpus to buy an annuity and get 20% as a lump sum payment.
So, the central government staff are weighing the cost-benefit between NPS and UPS as once the choice is exercised, it is irreversible.
Recently, the Centre has extended the benefit of retirement gratuity and death gratuity to staff under UPS, to placate them.