Kerala govt delays decision on Unified Pension Scheme

The Kerala Government has not yet decided on implementing the Unified Pension Scheme (UPS) in the state, despite the Union Finance Ministry notifying its adoption for Central Government employees from April 1.

Last year’s Kerala budget proposed scrapping the contributory pension scheme and introducing an ‘assured pension plan’ for state government employees. However, details of the new scheme remain undecided. A government-appointed committee met once to outline the framework but made no major decisions.

Officials cite the state's severe financial crisis as a key reason for delaying UPS adoption. The Centre’s introduction of UPS shortly after Kerala’s pension announcement has also led to confusion in the state’s Finance Department regarding which scheme to follow.

In states like Rajasthan, where previous governments replaced the contributory pension scheme with statutory pensions, the BJP recently won elections and is expected to either retain the contributory model or adopt UPS. Kerala officials note that many states face challenges in moving away from the contributory system, delaying new pension policies.

Implementing UPS would also add a financial burden. Currently, Kerala contributes 10% of an employee’s salary to the pension fund and has yet to raise it to 14% as recommended by an expert panel. Under UPS, the state’s share would rise to 18.5%, which officials say is unaffordable.

Meanwhile, around two lakh state government employees under the contributory pension scheme await an announcement on the new pension plan in the state budget, set to be presented on February 7.