Unified Pension Scheme: How To Secure More Predictable And Assured Pensions? Find Out

Unified Pension Scheme: The UPS will come into effect on April 1, 2025, and is expected to benefit around 23 lakh central government employees

Unified Pension Scheme: The introduction of the Unified Pension Scheme (UPS) by the NDA government has sparked widespread discussion as it positions itself as a more secure alternative to the National Pension System (NPS). This new scheme is set to provide government employees with inflation-adjusted, stable pension disbursements, benefiting millions of central employees.

The UPS will come into effect on April 1, 2025, and is expected to benefit around 23 lakh central government employees. It aims to ensure more predictable and assured pensions for its subscribers, offering stability for individuals transitioning from the NPS as well as new entrants.

Here are the key features of UPS.

Assured Pension

Employees with at least 25 years of service will receive 50 per cent of their average salary from the last 12 months before retirement. For those with service periods of 10-25 years, pension payouts will be calculated on a proportional basis.

Minimum Pension

A minimum monthly pension of Rs 10,000 is guaranteed for employees who have completed at least 10 years of service before retirement.

Family Pension

In the unfortunate event of an employee’s death, 60 per cent of the pension will be provided as an assured family pension.

Inflation Protection

Pensions under UPS will be adjusted for inflation, ensuring the value remains stable against rising costs of living.

Increased Government Contribution

Under the new scheme, the government will contribute 18.5 per cent of the employee's basic salary plus dearness allowance (DA), up from the current 14 per cent.

Dearness Relief

Pension disbursements will also benefit from dearness relief, linked to the All India Consumer Price Index for Industrial Workers (AICPI-IW).

Lump Sum Payment

At the time of retirement, employees will receive a lump sum payment equivalent to 1/10th of their monthly emoluments (pay + DA) for every six months of service. This will be in addition to their gratuity and will not reduce the quantum of assured pension.

Pro-Rata Benefits for Shorter Service Periods

Employees who retire after serving less than 25 years will receive pensions on a pro-rata basis. The minimum service requirement is set at 10 years, with those who meet this requirement eligible for the Rs 10,000 minimum pension.

The UPS promises to provide greater financial security and predictability for employees as they transition into retirement, marking a significant shift from the NPS. With inflation-indexed pensions and enhanced benefits, the scheme is expected to offer a stable financial safety net for both employees and their families.