Unified Pension Scheme (UPS): All You Need to Know

In August 2024, the Central Government unveiled the Unified Pension Scheme (UPS), a new alternative to the National Pension System (NPS). According to the government, the scheme will be implemented starting April 1, 2025.

For years, central government employees have pushed for the restoration of the Old Pension Scheme (OPS) in place of the NPS, which has been in effect since 2004. The UPS is expected to benefit approximately 23 lakh Central Government employees.

What is the Unified Pension Scheme (UPS)?

The Unified Pension Scheme offers a guaranteed pension similar to the Old Pension Scheme, ensuring stability, financial security, and dignity for retired government employees. It is designed to safeguard their well-being and future after retirement.

Currently, employees under the National Pension System (NPS) can choose to either remain with NPS or opt for UPS. However, once an employee selects the UPS, the decision is irreversible.

Key Features of the Unified Pension Scheme

1. Assured Pension

   • Employees with a minimum of 25 years of qualifying service will receive an assured pension equal to 50% of their average basic salary over the last 12 months before retirement.
   • For service periods shorter than 25 years (but at least 10 years), the pension amount will be proportionately reduced.

2. Minimum Assured Pension

   • Employees who retire with at least 10 years of service will be guaranteed a minimum monthly pension of ₹10,000.

3. Family Pension

   • In the event of a retiree's death, their immediate family will receive 60% of the pension amount last drawn by the retiree.

4. Inflation Indexation

   • Pension amounts under UPS will include inflation adjustments based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to the dearness relief given to active employees.

5. Lump-Sum Superannuation Payment

   • In addition to gratuity, employees will receive a lump-sum payment upon superannuation. This is calculated as 1/10th of their monthly salary (basic pay + dearness allowance) for every six months of completed service.

The Unified Pension Scheme provides government employees with the choice of a secure, predictable retirement plan, balancing the need for financial stability with modern pension reforms.