Big news for pensioners. The Unified Pension Scheme (UPS) is set to roll out on April 1, 2025, aiming to enhance the pension system in India. The central government has given the green light for this initiative, which will function similarly to the National Pension System (NPS). This is a significant move for central government employees.
With this scheme, employees can look forward to a more secure retirement. The government plans to simplify and make the pension process more transparent.
Who can benefit from UPS?
As per the latest gazette notification, central government employees who are part of the National Pension System will have the option to choose UPS. Right now, around 23 lakh employees can select between UPS and NPS. Additionally, all new central government employees starting after April 1, 2025, will also have the choice of either scheme.
What will the pension look like?
Under UPS, retired government employees will receive a pension amounting to 50% of their average basic salary from the last 12 months before retirement. However, to qualify, they need to have worked for a minimum of 25 years.
1. If an employee has less than 25 years of service, their pension will be slightly reduced.
2. Employees with at least 10 years of service will still receive a minimum monthly pension of Rs 10,000.
3. Those who are terminated, dismissed, or resign voluntarily will not be eligible for any pension benefits.
Government contribution
Currently, the government contributes 14% towards the pensions of central government employees. With the introduction of the UPS, this contribution will rise to 18.5%. This means the government will invest more in ensuring a secure post-retirement life for employees. However, employees will need to contribute 10% of their basic salary and dearness allowance to the UPS.