The new financial year begins on April 1. In this context, the good news for central government employees is the introduction of the Integrated Pension Scheme (IPS), which will replace the current National Pension System (NPS). As per the updated rules, employees enrolled in the NPS can now switch to this new scheme. This scheme could benefit around 23 lakh central government employees. If state governments also adopt this scheme, it could help more than 90 lakh government employees across the country.

What is the Integrated Pension Scheme (IPS)?

The Integrated Pension Scheme (IPS) has been designed to provide better benefits to central government employees after retirement. Under this scheme, retired employees will receive 50% of their average basic salary from the 12 months before retirement, provided they have worked for at least 25 years. This ensures that retirees have a stable income after they stop working.

What are the key features of the scheme?

  1. Increased Government Contribution: The government’s contribution in this scheme will rise from 14% to 18.5%, benefiting employees.
  2. Employee Contribution: Employees will not have to pay more under the new scheme, as their contribution will remain the same.
  3. Pension for Family: If the pensioner passes away, the family will receive 60% of the pension the employee would have received. This will provide financial support to the family after the pensioner’s death.
  4. Minimum Job Requirements: Employees retiring after 10 years of service will receive a minimum pension of ₹10,000 per month, ensuring financial stability.

Benefits for Retired Employees

This scheme will also apply to employees who were previously enrolled in the National Pension System (NPS). They will receive additional financial relief in the form of their previous salary arrears, along with interest at Public Provident Fund (PPF) rates.

Opt-In Option for Employees

The Integrated Pension Scheme (IPS) will be optional for all central government employees. Those enrolled in NPS or VRS (Voluntary Retirement Scheme) will have the choice to join IPS. Once employees opt for the new scheme, their decision will be final and cannot be changed.