Thiruvananthapuram – The Kerala Finance Department has allowed civil service officers such as IAS, IPS, and IFS officers employed by the state to opt into the Union Government’s Unified Pension Scheme (UPS). This new pension option, which offers around 50% of the last drawn salary as post-retirement benefits, is seen as a significant improvement over the existing contributory pension model. However, the decision notably excludes over two lakh other state government employees, who remain stuck in the current contributory scheme with no clarity on whether they too can transition to UPS or benefit from an alternative state-led pension plan.
While the move is expected to attract a large number of officers toward UPS due to its guaranteed returns, it also raises serious financial questions. Kerala would need to contribute 18.5% of an employee’s basic pay under UPS—significantly more than the 10–14% under the present system—putting pressure on the state’s finances. As state employees continue to demand pension parity, a final decision is now expected in the upcoming state budget. The government has hinted that a new pension strategy is in the works, potentially through a committee recommendation.
With this, Kerala joins states like Haryana and Rajasthan in grappling with the complex task of balancing employee welfare and long-term fiscal responsibility in the era of evolving pension reforms.
