In a bid to provide financial security to the 23 lakh Central Government employees after retirement, the Center has introduced the Unified Pension Scheme (UPS) which will come into effect the coming financial year from April 1, 2025. The scheme ensures to provide a fixed pension to the eligible employees post-retirement. Notably, it combines the best features of the Old Pension scheme (OPS) and the National Pension Scheme (NPS).
All you need to know about UPS
Eligibility criteria
In order to qualify for the scheme, the employees will have to complete minimum 10 years of service. A decade is the minimum service requirement to avail the benefits of the scheme. The employee shall start receiving his pension from the retirement date. The scheme is applicable for only those employees registered under the National Pension Scheme (NPS), meeting the eligibility criteria. Retiring employees under this rule without penalties, will also qualify for pensions starting from date of retirement under the Fundamental rule (j). The FR (j) is a provision that allows government to retire employees in public interest. The employees choosing for Voluntary retirement after 25 or more years of service will receive pensions similar to being retired at the normal age of superannuation.Employees who resign, are dismissed or removed from the service will be excluded from the benefits of the scheme.
Pension calculation
Employees with 25 years of service or more, will receive 50%, i.e. half of their basic pay as pension. This will be calculated from the last 12 months of working. The employees with less than 25 years of service will be provided pensions in proportionate to the number of years in service. Employees with 10 years in service or more, will get a minimum pension of Rs. 10,000 per month. As for a widow or a widower, the surviving spouse will receive 60% of pension from the date of employee’s retirement.Other benefits include:
The pensioners will be eligible for Dearness Relief (DR) with respect to counter inflation. Dearness relief shall be provided once the employee starts receiving pensions. The employees will receive 10% of their total monthly salary that includes both the basic pay as well as the dearness allowance for every six months of service at the time of retirement. This comes under the lump sum benefits of the scheme, operated on the dual fund model. The lump sum won’t cause any effect on the monthly pension.Time provided and the choice for employees
UPS will be fully implemented in the country from April 1, 2025. The employees will be able to choose from NPS and UPS, any one final. The employees who will be retiring before the scheme implementation, will be able to apply for the scheme through a top-up payment process.
The UPS shall revolutionize the pension system prevalent in India. It aims to ensure a fixed, secure and stable pension to the government employees post-retirement. It also carries the objective to bring consistency to the pension structure, giving a boost with the financial benefits of both NPS and OPS. The employees will be able to have a life of dignity and security with a fixed income in old age.