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The finance ministry is studying global pension fund management practices and India’s experience of running the Employees’ Provident Fund Organisation (EPFO) to soon firm up rules on investing the corpus made up of additional government contributions under the recently-announced Unified Pension Scheme (UPS), senior officials said.
Under the UPS, which promises an assured pension to central government employees, the pension corpus is divided into an individual fund and a ‘pool corpus’.
An employee’s monthly contribution at 10% of their basic pay and dearness allowance, and matching payment by the government, would be deposited in the individual pension fund. But an additional 8.5% contribution is to be made by the government to the separate pool corpus to support the assured pension pledge.
While an employee can have a say on the deployment of money available under their individual pension fund, the investment decisions on the pool corpus would be made by the government alone. The UPS came into effect from April 2025.
Given that assured pension benefit is central to UPS, the ministry is looking at investment of the pool corpus in instruments that would keep generating adequate returns for the long-term viability of the scheme.
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“The ministry will finalise the rules soon (on investing the pool corpus). The idea is to arrive at a model that would be most appropriate for us,” said a senior official.The UPS was announced to ensure the central government employees get an assured pension amount, which isn’t guaranteed under the National Pension Scheme (NPS). The government’s contribution to the overall pension corpus is also higher under the UPS-18.5% against 14% under the NPS. Employees can choose to stay with the NPS but once they opt for the UPS.
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