Last Updated:
This Unified Pension Scheme (UPS), which combines aspects of both the Old Pension Scheme (OPS) and the National Pension System (NPS), aims to provide employees with a guaranteed pension, offering financial stability and dignity after retirement.
Unified Pension Scheme: Know Eligibility, Benefits, Payout Calculation, Other Aspects.
In a landmark move to ensure financial security for Central Government employees post-retirement, the Centre has announced the implementation of the Unified Pension Scheme (UPS). This new scheme, which combines aspects of both the Old Pension Scheme (OPS) and the National Pension System (NPS), aims to provide employees with a guaranteed pension, offering financial stability and dignity after retirement. The scheme will come into effect from April 1, 2025, as per a government notification issued on January 24, 2025.
The Unified Pension Scheme will apply to Central Government employees already enrolled in the National Pension System (NPS). However, the scheme will be available only to those who meet certain criteria, as outlined in the notification. Employees must have completed a minimum of 10 years of qualifying service to be eligible for the scheme.
Eligibility
Under the UPS, employees will be eligible for an assured payout under the following conditions:
Superannuation: Employees who retire after completing at least 10 years of qualifying service will receive an assured pension from the date of their retirement.
Retirement under FR 56(j): Employees retiring under government provisions, but without penalty, will also qualify for the assured payout starting from the date of their retirement.
Voluntary Retirement: Employees opting for voluntary retirement after 25 or more years of service will receive a payout starting from the date they would have reached superannuation, had they continued in service.
However, the Unified Pension Scheme will not apply to employees who are dismissed, removed, or resign from service. In such cases, they will not be eligible for the UPS.
Payout Calculation and Benefits
The UPS offers several tiers of payout based on years of service:
Full Assured Payout: Employees with 25 or more years of qualifying service will receive 50 percent of their average basic pay from the last 12 months of service.
Proportional Payout: Employees with less than 25 years of service will receive a proportional payout based on their qualifying service.
Minimum Guaranteed Payout: Employees with 10 or more years of service are assured a minimum payout of Rs. 10,000 per month.
Additionally, for employees opting for voluntary retirement after 25 years of service, the payout will begin from the date they would have reached the age of superannuation.
Family Payout in Case of Death
In case of the pensioner’s death after superannuation, a family payout will be made. This payout will be 60 percent of the last admissible payout and will be provided to the legally wedded spouse of the deceased. The payout is made according to the date of superannuation, voluntary retirement, or retirement under FR 56(j).
Dearness Relief (DR) and Other Provisions
Dearness Relief (DR), which is typically applicable to serving employees, will be extended to both the assured and family payouts under the UPS. DR will be provided once the payout commences.
Furthermore, a lump sum payment of 10 percent of the monthly emoluments (basic pay + dearness allowance) will be provided for each six months of completed service at the time of superannuation. This lump sum will not affect the assured monthly payout.
The scheme aims to integrate the benefits of the Old Pension Scheme with the structure of the National Pension System, offering a more predictable and secure retirement plan for government employees.
Effective Date and Transition
The Unified Pension Scheme will be fully operational from April 1, 2025, giving employees an option to choose between the NPS and the new UPS. It also includes provisions for government employees already retired but opting for this new system. For them, the pension authority will implement an appropriate top-up payment system to ensure a smooth transition into the new framework.
The implementation of the UPS marks a significant 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.
