Pension reforms in India have taken a significant leap forward with the introduction of the Universal Pension Scheme (UPS). This new initiative aims to provide financial security to all citizens, including those working in the unorganized sector. The voluntary and contributory scheme will replace several existing pension plans, creating a comprehensive retirement framework for individuals across employment categories.
Set to be implemented from April 1, 2025, the UPS guarantees federal government employees a pension of 50% of their base salary, provided they have served for a minimum of 25 years. This move is expected to address long-standing demands for assured pension benefits and enhance India’s social security landscape.
Financial Impact & EPFO Developments
Pension costs under the new scheme will require an estimated additional ₹8,500 crore in the fiscal year 2025-26. Meanwhile, the Employees’ Provident Fund Organisation (EPFO) is expediting higher pension applications, with 70% already verified. The target is to complete all processing by March 31, 2025, though a potential reduction in interest rates may impact returns on provident fund deposits.
With these reforms, the government aims to ensure long-term financial stability for retirees and strengthen the pension ecosystem in India.
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