The Union finance ministry has notified the Unified Pension Scheme (UPS) operationalization as an option under the National Pension System (NPS) for central government employees. Starting on April 1, 2025, the scheme will ensure guaranteed retirement benefits for eligible employees. Under the UPS, employees who have completed 25 years of service will receive 50% of their average basic pay drawn over the 12 months before retirement.
Those with less than 25 years but more than 10 years of service will receive a pension on a proportionate basis. The scheme also includes family or survivor-pension benefits fixed at 60% of the last-drawn salary of a deceased employee. Retire employees with a minimum of 10 years of service will receive an assured monthly pension of ₹10,000.
Unified Pension Scheme details
The scheme will be indexed to the Consumer Price Index for Industrial Workers (CPI-IW) to calculate dearness relief, which accounts for inflation. All employees who have retired since 2004 can switch to the UPS, while those preferring to remain under the NPS can continue to do so.
Employees joining service before April 2004 will continue under the Old Pension Scheme (OPS), which offers a fixed pension equaling 50% of their last drawn salary after retirement. Union finance minister Nirmala Sitharaman remarked on the progress of the NPS review committee, emphasizing a solution addressing pension-related issues while maintaining fiscal prudence. This policy shift responds to requests from federal staff unions for assured retirement benefits, aiming to replace the market-linked NPS that depended on market returns and investment outcomes.
UPS represents a balanced approach to guaranteeing income security for retiring central government employees.
