Unified Pension Scheme: Government employees will now be able to choose new pension, know who will get its benefit
Unified pension scheme: The central government has announced the Unified Pension Scheme (UPS) as an important step to ensure financial security of central employees after retirement. This new scheme, which is made by combining aspects of the old pension scheme (OPS) and the National Pension System (NPS), aims to provide guaranteed pension to employees, thereby maintaining financial stability and dignity after retirement. The scheme will come into effect from April 1, 2025, as stated in the government notification issued on January 24, 2025.
The integrated pension scheme will be applicable to central employees who are already enrolled in the National Pension System (NPS). However, the scheme will be available only to employees who fulfil certain of the criteria mentioned in the notification. Employees must complete at least 10 years of service to be eligible for the scheme.
Eligibility under UPS
Under UPS, employees will be eligible for an assured payment under the following conditions: Employees who retire after completing at least 10 years of service will receive an assured pension from the date of their retirement. Retirement under FR 56 (j): Employees retiring without penalty under government provisions will also be eligible for assured payment from the date of their retirement. Voluntary retirement: Employees who opt for voluntary retirement after 25 or more years of service will receive payment starting from the date they reach the retirement age while in service.
However, the integrated pension scheme will not be applicable to employees who have been dismissed, removed or resigned from service. In such cases, they will not be eligible for UPS.
Calculation of payments and benefits
UPS offers several payment levels depending on years of service: Full Guaranteed Payment: Employees with 25 or more years of service will receive 50 percent of their average basic paycheque for the last 12 months of service. Proportional payment: Employees with less than 25 years of service will receive proportional payment based on their service. Minimum assured payment: Employees with 10 or more years of service are ensured a minimum payment of Rs 10,000 per month.
Additionally, for employees opting for voluntary retirement after 25 years of service, payments will commence from the date they reach retirement age.
Dearness Relief (DR) and other provisions
Dearness Relief (DR), which is generally applicable to employees in service, will be extended for both assurance and family payments under UPS. DR will be provided after payment starts. Further, 10 per cent of the monthly salary (basic paycheque + dearness allowance) will be paid in a lump sum for every six months of full service at the time of retirement. This one-time payment will not affect the guaranteed monthly payment.
The scheme aims to integrate the benefits of the old pension scheme with the structure of the National Pension System, thereby providing a more predictable and secure retirement plan for government employees.
Since when is it being implemented?
The integrated pension scheme will be fully implemented from April 1, 2025, giving employees the option to choose between NPS and the new UPS. It also includes provisions for already retired government employees who opt for the new system. For them, the pension authority will implement a suitable top-up payment system to ensure smooth transition to the new structure. The implementation of UPS is an important step in ensuring that government employees are financially secure in their retirement, bringing together the benefits of both OPS and NPS in a structured and assured manner.
