The Cabinet has recently approved the Unified Pension Scheme (UPS) for central government employees, with the aim to provide a comprehensive pension structure by integrating features from both the Old Pension Scheme (OPS) and the New Pension Scheme (NPS).
- The UPS will be effective from April 1, 2025, and is set to benefit ~23 lakh central government employees.
About the Unified Pension Scheme (UPS)
- Assured Pension:
- Provides 50% of the average basic pay drawn over the last 12 months prior to retirement.
- Minimum qualifying service required is 25 years.
- For service periods shorter than 25 years, the pension amount will be proportionate.
- Unlike OPS, which considers the last drawn salary, the UPS calculates pension based on the average of the last 12 months.
- Assured Family Pension:
- In case of the employee’s demise, the family will receive 60% of the pension amount.
- Assured Minimum Pension:
- A minimum pension of ₹10,000 per month is guaranteed, provided the employee has served for at least 10 years.
- This is an increase from the ₹9,000 per month available under OPS and NPS.
- Inflation Indexation:
- Pension adjustments will be made based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to the OPS.
- Lumpsum Payment on Superannuation:
- In addition to gratuity, employees will receive a lump sum amount equivalent to 1/10th of their monthly salary plus Dearness Allowance for every completed six months of service.
- This lump sum payment will not affect the assured pension amount.
- Options for Employees:
- Employees retiring by March 31, 2025, will be eligible for the UPS benefits, including any arrears.
- From the upcoming financial year, employees will have the option to choose between the UPS and NPS.
Ref: Source
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Frequently Asked Question:
What is the purpose of the Unified Pension Scheme (UPS) approved by the Cabinet?
The UPS aims to provide a comprehensive pension structure by integrating features of both the Old Pension Scheme (OPS) and the New Pension Scheme (NPS) for central government employees.
How will the pension amount be calculated under the Unified Pension Scheme (UPS)?
The pension amount under UPS will be 50% of the average basic pay drawn over the last 12 months prior to retirement, with a minimum qualifying service requirement of 25 years.
What is the provision for family members in case of an employee’s demise under the Unified Pension Scheme (UPS)?
In the event of an employee’s demise, the family will receive 60% of the pension amount as assured family pension.
How does the Unified Pension Scheme (UPS) differ from the Old Pension Scheme (OPS) in terms of calculating pension?
Unlike OPS, which considers the last drawn salary, the UPS calculates pension based on the average of the last 12 months’ basic pay.
Is there a minimum pension amount guaranteed under the Unified Pension Scheme (UPS)?
Yes, the UPS guarantees a minimum pension amount of ₹10,000 to ensure financial security for central government employees after retirement.