UPS will become effective for central government employees on April 1, 2025. Read more to find out who is eligible and what benefits are included
The central government recently announced the Unified Pension Scheme (UPS) for government employees, which will come into effect from April 1, 2025 onwards. This scheme aims to give financial security to its employees post-retirement. This announcement is expected to bring significant relaxation to central government employees, supporting them in maintaining their financial stability after retirement.
The union cabinet brought in UPS on August 24, 2024, as a solution to equalise the requirement for enhanced employee benefits with fiscal sustainability. The scheme combines the benefits of the Old Pension Scheme (OPS) and the National Pension Scheme (NPS). According to this scheme, employees will get a fixed pension post-retirement. This move aims to ensure their financial stability. It is available for employees who are covered under the NPS and have chosen the UPS. Unlike OPS, UPS needs contributions from both employees (10 per cent of salary) and the government (18.5 per cent of salary). This contribution stood at 14 per cent from the government in the NPS and 10 per cent from employees.
Key Advantages Of The Unified Pension Scheme
The UPS offers various key benefits to the central government employees:
Guaranteed Pension: As per the UPS, central government employees will get 50 per cent of their average salary from the last 12 months before retirement. To be eligible for the scheme, one has to serve for a minimum of 25 years.
Proportional Pension: Employees who have worked for over 10 years but less than 25 years will get a pension on that proportion.
Minimum Pension: The new pension scheme guarantees a minimum monthly pension of Rs 10,000 for workers retiring after at least 10 years in service.
However, under the OPS, there was no specific minimum pension amount mandated, retirees generally received 50 per cent of their last drawn salary as their pension.
Family Pension: In the unfortunate case of the demise of an employee, around 60 per cent of the pension amount will be credited to their family members or as a family pension.
Financial Security: This scheme makes sure that employees remain financially safe post-retirement.
Who Is Eligible For Unified Pension Scheme
To be eligible for UPS, an individual should meet the following criteria:
The scheme applies to central government employees who are covered under the National Pension System (NPS). It is mandatory for the employees to opt for UPS under the NPS framework.
UPS Versus NPS: Key Differences
The main difference between UPS and NPS is that UPS guarantees a fixed pension after retirement, while NPS is based on market-linked returns. Therefore, UPS can be a better option for any employee who is looking for a stable income after they retire.