Major news for pensioners. So many rules are going to change from April 1. One of them is regarding Pension. Starting April 1, Central government employees who have completed at least 25 years of service will qualify for a fixed pension amounting to 50% of their average basic salary from the last year before retirement, thanks to the new Unified Pension Scheme (UPS).
This initiative aims to provide greater financial stability post-retirement for around 2.3 million Central government employees, especially those who prefer a consistent income rather than one tied to market fluctuations.
For employees with over 10 years but less than 25 years of service, there will be a minimum pension of Rs 10,000 per month. If a pensioner passes away, their family will receive 60% of the last drawn pension as a family pension. Additionally, current employees under the National Pension System (NPS) can opt to transition to the UPS.
The UPS is a hybrid model that combines elements from both the Old Pension Scheme (OPS) and the NPS. Unlike the NPS, which relies on market performance and does not guarantee a fixed payout, the UPS promises a secure pension amount. The OPS, which was phased out in 2004 in favor of the NPS, offered fully government-supported pensions with regular adjustments for inflation.
The launch of the UPS is a direct response to the rising concerns among government workers regarding the unpredictability of the NPS.
Many employees have called for a more reliable pension system to ensure they have financial security after they retire. The government is looking to strike a balance between providing employee security and managing its financial obligations with this new initiative.
This change might also encourage state governments to consider similar pension options. Those with over 25 years of service will gain the most from the 50 percent guaranteed pension, while others should evaluate their financial objectives and comfort with risk.
For employees wanting a consistent income after retirement, the UPS could be a better fit, while those who are okay with market ups and downs might still lean towards the NPS for the chance of higher returns. Just last week, the Pension Fund Regulatory and Development Authority (PFRDA) officially announced the implementation of the UPS under the NPS Regulations 2025.
These new regulations will allow three groups of Central government employees to enroll. The first group includes current Central government employees who are part of the NPS as of April 1, 2025. The second group consists of new hires in Central government services starting on or after that date.
The third group is made up of Central government employees who were part of the NPS and have either retired, voluntarily left, or retired under Fundamental Rules 56(j) before March 31, 2025. This group also includes the legally wedded spouse of a subscriber who has retired or passed away before opting for the UPS.
Enrollment and claim forms for all these categories of Central government employees will be accessible online starting April 1, 2025, at the website – https://npscra.nsdl.co.in.