Big news related to pension has come out for railway employees. The Railway Ministry has notified the rules for implementing the Unified Pension Scheme (UPS) for its employees who are covered under the National Pension System (NPS). Many important things like minimum pension along with pension guarantee, retirement benefits, option to switch back from VRS and UPS to NPS have been clarified in the new rules.
Eligible under UPS Railway Employees will get an assured pension of at least ₹10,000 after completing 10 years of service. At the same time, employees who have completed 25 years of service will get the benefit of full assured pension. The full pension will be 50% of the average basic pay of the employee for the last 12 months before retirement. If the service period is more than 10 years but less than 25 years, the pension will be reduced in the same proportion.
How much will employees and Railways contribute?
An employee choosing UPS will have to deposit 10% of his basic pay and DA in his UPS account every month. Railways will also make a matching contribution of 10% of the employee’s basic pay and DA. Additionally, an estimated 8.5% of basic pay and DA will be contributed by the government to the pool corpus created to provide assured pension.
VRS option after 20 years of service
In the new rules, railway employees have also been given the option to take voluntary retirement i.e. VRS after completing 20 years of service. However, pension will not start immediately on taking VRS. Its payment will start from the date on which the employee would normally retire. An employee taking VRS who has completed 25 years of service can get an assured pension of 50% of the average basic pay as per the rules.
Opportunity to return from UPS to NPS
An employee joining UPS can opt to revert to NPS once during his service. However, this decision will be final. After choosing NPS the employee will not be able to come back to UPS again.
Benefit of dearness relief on pension
One of the most important facilities of UPS is Dearness Relief (DR) on pension. Eligible pensioners as well as those receiving family pension will get DR as per applicable government rules and rates. That means, after retirement, there will be a provision of DR in the pension to provide relief from the impact of inflation.
Which employees will get the benefits of UPS?
The option of UPS will be available to eligible Railway employees appointed on or after January 1, 2004 and covered under NPS. However, casual and daily wage employees, contract workers and certain categories covered under separate pension rules will not be covered.
