New pension rules for Indian government employees: What has changed?
What's the story
The Department of Pension and Pensioners' Welfare has announced new rules under the Unified Pension Scheme (UPS) for Indian government employees. The rules, notified today, allow employees to opt for Voluntary Retirement Scheme (VRS) after completing 20 years of service. However, full assured payout under the scheme will only be available after 25 years of service.
Payout structure
Pro-rata benefits for early retirement
The Ministry of Personnel, Public Grievances and Pensions clarified that employees opting for VRS after 20 years will receive pro-rata benefits. This means they will get a portion of the full assured payout based on their qualifying service years. The calculation will be done by dividing the years of qualifying service by 25 and multiplying it with the assured payout.
Extras
Other benefits
Apart from the assured payout, other retirement benefits under the new rules include final withdrawal of 60% of Individual Corpus and lump sum benefit. Employees will also be entitled to retirement gratuity, leave encashment and CGEGIS benefits. These additional benefits can be availed on retirement irrespective of whether an employee opts for VRS or continues till superannuation.
Family benefits
Family payout provision
In case a subscriber dies after opting for VRS but before receiving the assured payout, their legally wedded spouse will be granted a family payout. This provision ensures financial security to the family of subscribers who pass away before their assured payouts commence under the new rules. The family payout will be effective from the date of death of the subscriber.