On the night of August 24th, the Modi government unexpectedly introduced a new pension scheme, distinct from the existing Old Pension Scheme (OPS) and the New Pension Scheme (NPS). This new initiative is called the Unified Pension Scheme (UPS). The announcement brought relief to millions of employees who had been raising their voices for OPS, as it attempted to address their demands through the UPS.
The Maharashtra government has already implemented the UPS for state employees. However, questions are now being raised about its implications for the pension system within the Indian Army. There are speculations that this could lead to changes in the pensions provided to army personnel. Let’s delve deeper into the current regulations and the potential changes.
Current Pension Regulations in the Indian Army
In India, the number of pensioners and family pensioners from the armed forces exceeds 2.6 million, with approximately 55,000 new pensioners added each year. The Indian government also distributes pensions to armed forces pensioners residing in Nepal. According to the Ministry of Defence, retired army personnel receive a pension equivalent to 50% of their average salary over the last 10 months, with a minimum monthly pension of ₹9,000. For eligibility, commissioned officers must have served a minimum of 20 years, while non-commissioned officers need at least 15 years of service. It’s noteworthy that under the UPS, this regulation has been altered to reflect 50% of the average salary over the last 12 months.
Eligibility and Family Pension Details
If a soldier dies due to circumstances during service, their family receives 30% of the salary as a pension, which is also subjected to the minimum limit of ₹9,000 per month. If the salary is below this threshold, the family is guaranteed ₹9,000. Additionally, the total accumulated fund amount will provide 60% as a lump sum to the family.
Pension Amount in Specific Cases
Families of soldiers who lose their lives in combat, counter-insurgency operations, or terrorist engagements are entitled to a pension equal to the deceased soldier’s last drawn salary. Similarly, in cases of disability or invalidation due to military service, 50% of the last salary is awarded. However, pensions are not granted for disabilities acknowledged at less than 20%.
Potential Changes with the New Pension Scheme
The newly introduced UPS offers employees a guaranteed pension of 50% based on their average basic pay from the last 12 months. In contrast, under the Old Pension Scheme, the pension is directly calculated as 50% of the last salary. The current military rule bases the pension on the average salary of the last 10 months.
Under the OPS, the pension is calculated using 50% of the employee’s basic salary plus dearness allowance. The UPS has made a notable adjustment, ensuring that while employees are still entitled to a 50% pension, it will now be derived from their average basic salary over the last 12 months, rather than their final month’s salary.
Impact on Promotions
In government jobs, employees often receive promotions just before retirement, which increases their final salary and consequently influences their pension calculations. However, with the UPS, this benefit is negated. Even if an employee’s salary increases in the final month due to a promotion, their pension will be calculated based on the average salary, which could result in a lower pension amount.
Summary of Key Changes
| Aspect | Old Pension Scheme (OPS) | New Unified Pension Scheme (UPS) |
|---|---|---|
| Pension Calculation Basis | 50% of last drawn salary | 50% of average basic salary over last 12 months |
| Minimum Pension | ₹9,000 monthly | ₹9,000 monthly |
| Promotion Benefits | Included in calculation | Not included in calculation |
| Eligibility Period | 20 years for officers, 15 years for others | Same eligibility applies |
The introduction of the Unified Pension Scheme aims to streamline pension benefits and address the concerns of employees across different sectors, including the armed forces. However, the impact of these changes will need careful monitoring to ensure that pensioners receive adequate benefits in line with their service and sacrifices.
