The Centre has announced the Unified Pension Scheme (UPS) under the National Pension System (NPS), effective April 1, 2025. The scheme offers guaranteed retirement benefits, including 50% of the average basic pay over 12 months before retirement for employees with 25 years of service. It also provides family pensions, dearness relief, and a ₹10,000 minimum monthly pension.
Key Highlights of the Unified Pension Scheme
The Union finance ministry has notified the operationalisation of the Unified Pension Scheme (UPS), offering a guaranteed pension framework for central government employees under the National Pension System (NPS). The scheme, effective from April 1, 2025, addresses the long-standing demand for assured retirement benefits.
Features of the Unified Pension Scheme
- Eligibility: Central government employees covered under the NPS can opt for UPS. Employees who retired after 2004 are also eligible.
- Retirement Benefits:
- 50% of the average basic pay drawn over the 12 months before retirement for employees completing 25 years of service.
- Proportionate pension for employees serving between 10 to 25 years.
- Family and Survivor Pension: Fixed at 60% of the last drawn salary for deceased employees.
- Minimum Pension: Employees with a minimum of 10 years of service will receive ₹10,000 as a monthly pension.
Indexation and Inflation Protection
The UPS will be indexed to the Consumer Price Index for Industrial Workers (CPI-IW), ensuring pensions are adjusted for inflation. Dearness relief, calculated based on CPI-IW, will protect pensioners from rising living costs.
Transition from NPS to UPS
While the NPS remains an option for employees, the UPS provides an assured monthly payout, addressing concerns about market-linked fluctuations under NPS. The shift to UPS highlights the government’s effort to balance fiscal prudence with employee welfare.
Background and Approval
The UPS was approved by the Union cabinet in August 2024 after a panel, led by TV Somanathan, recommended the framework. The scheme aims to resolve grievances about the market-dependent NPS and offers a sustainable alternative to the old pension scheme (OPS).
Stay informed about further updates and developments regarding the Unified Pension Scheme.
4o
