The central government has decided to put an end to the contributory pension, which has caused much protest among government employees, and implement the new unified pension scheme. The UPS (Unified Pension Scheme) scheme will come into effect on April 1st. The new pension will be fifty percent of the employee's last twelve months average salary. It has been announced that a pension of at least ten thousand rupees will be given to those who have served for ten years. Dearness allowance has also been sanctioned for twice a year. If the pensioner dies, the dependents will get sixty percent of the pension. The employee organizations and opposition parties have been demanding for a long time that the contributory pension implemented since 2004 should be withdrawn and the statutory pension should be implemented as before.

One of the main promises of the opposition in the last Lok Sabha and Assembly elections was related to pension scheme reforms. The central government, which was adamant that it would not go back to the old pension scheme, must have reconsidered its decision in the context of the setback in the elections. Prime Minister Narendra Modi said that the new pension scheme will ensure dignity and financial security for government employees. 23 lakh employees of central service and their family members will benefit through the new pension scheme. The central exchequer will incur an additional cost of Rs 6,250 crore in the first year. 800 crores will be required for the arrears alone. While the employees contribute ten percent to the pension fund, the central share will be 18.5 percent. Currently, it is fourteen percent.

The central proposal is that state governments can also adopt the new pension scheme. If that happens, this will become a decision that will benefit 90 lakh government employees of the country. While this is a delight for government employees, there are many who frown upon the frequent perks of government employees in a country of 140 crore people. Government employees are the most dominant of the organized forces. Therefore, one cannot pretend that he cannot see the politics of appeasing them. The Centre's pension decision is sure to put state governments on the defensive. NDA-ruled states are sure to move towards UPS scheme. Maharashtra has already started it. It is also a way to attract the voters of Maharashtra, where assembly elections are imminent, to the ruling front.

Other states ruled by opposition parties have already come out against the contributory pension scheme. There are states that have reverted to the old system. However, there is no doubt that retirement life will be more pleasant for government employees. There are indications that the Centre has formed the UPS scheme after holding discussions with the states. Some details of the new scheme are yet to come out. The information about the commutation benefit for the employees at the time of retirement has not been released. The Centre has tried to eliminate the shortcomings of the Contributory Pension Scheme. Aids of Contributory Pension Scheme fluctuate with market fluctuations. The explanation is that the UPS Scheme takes into account future differences in the value of money. The assurance that the interests of the employees will not be harmed in any way will make the UPS Scheme more attractive.