Unified Pension Scheme Launching on April 1, Benefiting 23 Lakh Employees
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Synopsis
The Unified Pension Scheme (UPS) will commence on April 1, enabling Central government employees with 25 years of service to receive a pension equal to 50% of their final basic salary. This scheme aims to provide financial stability post-retirement to 23 lakh employees, ensuring predictable income over market-linked options.
Key Takeaways
- UPS guarantees a pension of 50% of average salary.
- Minimum pension of Rs 10,000 for service between 10 to 25 years.
- Family pension of 60% in case of the pensioner’s death.
- Option to switch from NPS to UPS for existing employees.
- Online forms available from April 1, 2025.
New Delhi, March 24 (NationPress) Starting April 1, employees of the Central government who have completed a minimum of 25 years of service will qualify for a fixed pension amounting to 50 per cent of their average basic salary based on the last 12 months prior to retirement under the newly established Unified Pension Scheme (UPS).
This initiative aims to provide enhanced financial security post-retirement to around 23 lakh Central government employees, especially catering to those who prefer a consistent and predictable income rather than a market-related pension.
For employees with more than 10 years but less than 25 years of service, a minimum pension of Rs 10,000 per month will be guaranteed. Upon the death of a pensioner, their family will receive 60 per cent of the last drawn pension as a family pension.
Current Central government employees under the National Pension System (NPS) will have the choice to transition to the UPS.
The UPS is structured as a hybrid model, merging aspects from both the Old Pension Scheme (OPS) and the NPS.
Unlike the NPS, which provides returns based on market performance without fixed payouts, the UPS guarantees a specified pension amount.
The OPS, which was phased out in 2004 in favor of the NPS, offered pensions fully backed by the government with regular revisions for dearness allowance.
The rollout of the UPS is a response to the increasing concerns of government employees regarding the unpredictability of the NPS.
Many employees have called for a more reliable pension system to secure their financial future after retirement. The government's objective is to strike a balance between employee security and fiscal responsibility through this new plan.
This initiative may also prompt state governments to investigate similar pension frameworks. Employees with over 25 years of service will reap the most benefits from the 50 per cent guaranteed pension, while others should evaluate their financial aspirations and comfort with risk.
Employees looking for a reliable post-retirement income may find the UPS more advantageous, whereas those who are at ease with market variations might still opt for the NPS for potentially increased returns.
Recently, the Pension Fund Regulatory and Development Authority (PFRDA) formally announced the implementation of the UPS under the NPS Regulations 2025.
These regulations facilitate the enrollment of three groups of Central government employees. The first group includes existing Central government employees serving as of April 1, 2025, who are part of the NPS, the second group comprises new entrants to the Central government services starting on or after April 1, 2025.
The third group encompasses Central government employees who were enrolled in the NPS and have either retired or voluntarily left service under Fundamental Rules 56(j) on or before March 31, 2025, along with their legally wedded spouse in cases where the subscriber passed away before opting for the UPS.
Enrollment and claim forms for all these categories of Central government employees will be accessible online starting April 1, 2025, on the website - https://npscra.nsdl.co.in
