The Unified Pension Scheme (UPS) is not anticipated to have a major effect on the Center's pension cost, which is projected to be Rs 2.43 lakh crore in the current fiscal year.
Sources claim that although the new pension plan will have an impact and that this will show up in the budget deficit, the pension cost is now at an all-time low, making up only 5% of the size of the Union Budget.
According to insiders, it is also doubtful that UPS's basic pension would be examined as part of the next Pay Commission's award; they also said that this will guarantee that it won't have a significant negative influence on the financial statements. A move of this kind would be noteworthy since it is anticipated that the Eighth Pay Commission will be established shortly and that its recommendations would take effect on January 1, 2026. Additionally, the UPS may function as a pooled fund, which would partially mitigate the burden on the Exchequer.
With effect from April 1, 2025, more than 99% of the 2.3 million central government employees are anticipated to use the UPS, which would result in an annual increase in cost by the government of Rs 6,250 crore. It is projected that arrears for former workers will require an upfront expenditure of Rs 800 crore.
The Center's pension expense is estimated to be Rs 2.43 lakh crore in FY25, virtually equal to Rs 2.38 lakh crore in FY24 and Rs 2.41 lakh crore in FY25, according to the Budget materials.
The present NPS (national pension system) is a defined contribution scheme, however the Macquarie research stated that this program will nonetheless deplete the exchequer even if it is not a total return to the OPS (old pension scheme), which was an entirely defined benefit.
It went on to say, "Most states now are already on NPS (close to 25 states), and there is pressure to shift now to the new UPS scheme which will further burden the state's fiscal deficit," noting that Maharashtra is the first state to go to the UPS. The central government established a target of 3% for the states' budget deficits, but the states' current deficits in India are 3.2% higher than that, and these programs might make the situation worse.
Concerns about returning to the Old Pension Scheme, which some states had previously stated, had also been voiced by the Reserve Bank of India in the past.
