Assam Adopts Unified Pension Scheme to Bridge NPS-OPS Gap

In a landmark decision aimed at bridging the long-standing divide between the Old Pension Scheme (OPS) and the market-linked National Pension System (NPS), the Assam government has formally launched the Unified Pension Scheme (UPS).

The scheme, notified by the Finance Department, creates a new, hybrid retirement framework that promises assured, market-independent payouts for state employees currently covered under the NPS.

The UPS is scheduled to come into effect on April 1, 2025. Crucially, the scheme offers existing NPS subscribers a one-year window from the date of notification to opt for the new structure, a choice that will significantly redefine their post-retirement financial security.

Those who choose not to exercise the option will continue under the existing NPS framework.

Assam Government Adopts UPS: A Hybrid Model to End the NPS-OPS Debate

The introduction of the UPS is a direct response to persistent demands from government employees for the guaranteed benefits associated with the OPS, which was discontinued in 2004.

Assam Chief Minister Himanta Biswa Sarma has publicly asserted that the adoption of the UPS, which mirrors a modified version of the NPS introduced by the Central Government, is intended to resolve this “long-standing debate.”

Unlike the pure NPS, which is entirely dependent on market returns, the UPS is designed as a hybrid model.

Its primary objective is to offer state government employees old-age security through assured payouts, insulating their retirement funds from market volatility while maintaining a fiscally sustainable contribution model.

Guaranteed Payouts and Enhanced Benefits

The core benefit of the Unified Pension Scheme is its commitment to providing a defined pension. Key features include:

• Assured Pension: Employees who complete a minimum of 25 years of qualifying service will be eligible for a full assured payout equivalent to 50 per cent of the average basic pay drawn over the last 12 months immediately preceding superannuation.
• Minimum Guaranteed Payout: Staff retiring with at least 10 years of service are guaranteed a minimum payout of ₹10,000 per month. Proportionate benefits will be extended to those with service between 10 and 25 years.
• Dearness Relief (DR): The pension is designed to be inflation-indexed, with Dearness Relief being applicable to both pensioners and family pensioners. This is a vital benefit that was often a point of contention under the pure NPS.
• Family Security: Family members of deceased pensioners will receive 60 per cent of the assured pension as family pension.
• Lump Sum Payment: Retiring employees are also eligible for a lump-sum payment. This payment is equivalent to 10 per cent of monthly emoluments (Basic Pay + DA) for every completed six-month period of service.

Dual Corpus and Increased Assam Government Contribution

To ensure the sustainability of the guaranteed payouts, the UPS introduces a dual-corpus structure alongside a substantially increased government contribution.

Employees will continue to contribute 10 per cent of their Basic Pay plus DA to an Individual Corpus (IC).

They can then invest this corpus under PFRDA regulations.

However, the government’s total contribution under the UPS will significantly rise from the previous 10% (under pure NPS). The new contribution is an estimated 18.5 per cent.

This includes a matching 10% contribution and an additional 8.5 per cent credited into a Pooled Corpus.

This pooled corpus will be managed by the state to guarantee the assured benefits.

This demonstrates a higher degree of governmental responsibility for the retirement security of its workforce.

Eligibility and Option Window

The scheme applies to all state government employees currently covered under the NPS. Employees with less than a decade of service are not eligible to shift.

Crucially, the window for current employees to switch to the UPS will last for one year. This period starts from the date of the formal notification.

Furthermore, the government has extended this benefit to former NPS retirees, allowing them to opt into the new scheme.

These retirees will also receive pension arrears with interest calculated at Public Provident Fund (PPF) rates.

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