Unified Pension Scheme Latest Update: The central government has announced the Unified Pension Scheme (UPS) for its employees. The government introduced the option of the Unified Pension Scheme (UPS) under the National Pension Scheme (NPS) for central employees, and a notification has been issued regarding this. The scheme was announced in August 2024, and the government will implement UPS from April 1, 2025.

UPS is a new government scheme designed to ensure the financial security of government employees after retirement. It is available to central government employees who joined under NPS on or after January 1, 2004. According to a statement from the ministry, central government employees covered under NPS can now opt for the Unified Pension Scheme.

More than 23 Lakh Central Employees to Benefit

The Pension Fund Regulatory and Development Authority (PFRDA) will issue necessary rules for this scheme, which is expected to benefit over 23 lakh central government employees. Under the Unified Pension Scheme (UPS), the government’s contribution will increase to 18.5 percent of the total basic pay and dearness allowance (DA), up from the previous 14 percent. Employees will continue to contribute 10 percent of their salary toward their pension.

Benefits of the Unified Pension Scheme (UPS)

The UPS scheme has been introduced in response to the long-standing demand from government employees for the restoration of the Old Pension Scheme (OPS), under which retired employees received 50 percent of their last drawn salary as a pension. Under UPS:

  • Government employees will contribute 10 percent of their basic salary and DA.
  • The government will contribute 18.5 percent, along with an additional 8.5 percent for a separate pooled corpus.
  • Upon retirement, employees will receive 50 percent of their average salary from the last 12 months as a pension.

Eligibility for the Unified Pension Scheme (UPS)

The Unified Pension Scheme is available only to employees who have completed at least 10 years of service.

Retirement Benefits Under UPS

Pension Guarantee: Employees will receive 50 percent of their average salary from the last 12 months as a pension.
Pension Adjustment with Inflation: The pension will be adjusted periodically according to inflation.
Family Pension: In case of the employee’s death, their family will receive 60 percent of the pension.
Retirement Benefits: Employees will receive a lump sum amount, along with gratuity, at the time of retirement.
Minimum Pension: Employees who have worked for at least 10 years are guaranteed a minimum pension of Rs 10,000 per month.
Voluntary Retirement: Employees can opt for voluntary retirement after 25 years of service, with the pension starting at the normal retirement age.

Can Employees Leave NPS and Move to UPS?

Employees who are already part of the National Pension Scheme (NPS) can switch to the Unified Pension Scheme (UPS). However, once employees shift to UPS, they cannot return to NPS.

How Will the Shift from NPS to UPS Happen?

To avail of the guaranteed pension under UPS, employees will need to transfer their entire NPS fund to the new scheme. If the NPS fund is less than the minimum required for UPS, employees will need to pay the difference themselves. Any excess amount in the NPS fund will be refunded.

Dearness Allowance (DA) and Dearness Relief (DR) under UPS

The government’s contribution to UPS will increase from 14 percent to 18.5 percent, while the employee’s contribution remains at 10 percent of basic salary and DA. Dearness Relief (DR) will be calculated in the same manner as Dearness Allowance (DA) for current employees, and it will be provided only once pension payments begin. Additionally, employees will receive a lump sum payment of 10 percent of their monthly salary (basic salary + DA) for every 6 months of service after retirement. This lump sum payment will not affect the guaranteed pension amount.