Accusing Congress of spreading misinformation, Finance Minister Nirmala Sitharaman on Tuesday said the newly launched UPS is a new pension scheme and not a rollback of NPS.

"It is not a rollback... it is different from OPS (Old Pension Scheme) and NPS (National Pension System). It is clearly a new package," she said, adding, the Unified Pension Scheme (UPS) is better and will satisfy most government employees.

UPS is tailored in such a fashion that every calculation fits and even the government is not burdened too much, she said.

She expressed hope that most of the states would adopt UPS "as it has a lot of benefits for employees".

On Congress' allegation that the government has taken a U-turn on the pension scheme, she said, the government has improved the pension scheme which is not a U-turn.

Senior Congress leaders have said going back on OPS would be foolhardy because of obvious challenges it posed.

Unfortunately, she said, "these days Congress makes comments without doing comprehensive study, which was not the case earlier. They have just become a nara-driven or sloganeering-driven party." Defending past decisions like restoration of indexation benefits as part of long-term capital gains tax (LTCG), she said, it was not a rollback but tweaking.

The just-announced Unified Pension Scheme for 23 lakh central government employees will be available only for those who are currently subscribers of the NPS.

The new scheme guarantees employees 50 per cent of their average basic pay over the last 12 months before retirement as a pension for a minimum qualifying service of 25 years against a market-returns linked payout under the NPS.

According to the scheme approved by the Union Cabinet on Saturday, the pension will be proportionate for a lesser service period of up to a minimum of 10 years. Also, assured pension of Rs 10,000 per month on superannuation after a minimum of 10 years of service.

The scheme has been brought out to address the concerns of government employees over NPS, which came into effect from January 1, 2004.

Under the old pension scheme (OPS), effective before January 2004, employees got 50 per cent of their last drawn basic pay as pension.

Unlike the old pension scheme, UPS is contributory in nature, wherein employees will be required to contribute 10 per cent of their basic salary and dearness allowance while the employer's contribution (the central government) will be 18.5 per cent.

Under the NPS, the employer contribution is 14 per cent, and the employee contribution is 10 per cent. However, the eventual payout depends on the market returns on that corpus, mostly invested in government debt.

Employees, under the OPS, were not required to make any contribution. They, however, contributed to the General Provident Fund (GPF). The accumulated amount, along with interest, was paid to the employee at the time of retirement.

As the NPS was less attractive than the OPS, several non-BJP-ruled states decided to go back to the old pension scheme, which offered a DA-linked benefit.

This prompted the Centre to constitute a committee in April 2023, under former Finance Secretary and now Cabinet Secretary-designate T V Somanathan to suggest improvement in the NPS architecture.

Fulfilling the long-pending demands of government employees ahead of assembly elections in Haryana and Jammu and Kashmir, the Union Cabinet on August 24 approved the UPS, which will provide assured pension to 23 lakh eligible central government employees.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.