The central government is bringing a new scheme Unified Pension Scheme (UPS) for its employees. Under this scheme, central employees who have been serving for at least 25 years will be eligible to get 50 percent of their average basic salary for the last 12 months before retirement as pension under UPS from April 1. With this scheme, the government is preparing to provide financial security to at least 23 lakh central employees after retirement.

UPS is being brought especially keeping in mind those people who like a stable and predictable income instead of a market-linked pension. Under the new scheme, employees who have served for more than 10 years but less than 25 years will get a minimum pension of Rs 10,000 per month. Enrollment and claim forms for the scheme will be available on the official website from April 1, 2025.

UPS is designed as a hybrid model

In the event of the death of the pensioner, his family will get 60 percent of the last pension as a family pension. Apart from this, central government employees, who are currently under the National Pension System (NPS), can switch to UPS. This scheme is designed as a hybrid model, which includes features of both the Old Pension Scheme (OPS) and the National Pension System (NPS).

Hence the need to start the scheme

NPS provides market-based returns without any fixed payment, while the new scheme UPS, different from NPS, ensures a guaranteed pension amount. OPS was replaced by NPS in 2004. OPS used to provide a fully government-backed pension with periodic dearness allowance revisions. UPS has been started given the growing concerns among government employees about the uncertainties of NPS. Many government employees demanded a more predictable pension system to ensure financial stability after retirement. The government aims to balance employee security with its financial responsibilities through this new scheme.

The move may also influence state governments to explore similar pension models. Those with more than 25 years of service will benefit the most from a 50 percent guaranteed pension. Employees seeking a stable income after retirement may find UPS preferable, while those comfortable with market volatility may prefer NPS for potentially higher returns.

PFRDA divides employees into 3 categories

Last week, the Pension Fund Regulatory and Development Authority (PFRDA) officially notified the operation of UPS under the NPS Regulations 2025.

These regulations divide central government employees into three categories:-

The first category includes existing central government employees in service as of April 1, 2025, who are covered under NPS.

The second category includes recruits to Central Government services who join service on or after April 1, 2025.

The third category includes Central Government employees who were covered under NPS and who have retired on or before March 31, 2025 (voluntarily retired or retired under Fundamental Rule 56(j)) and are eligible for UPS or legally married spouses who have retired or who have passed away before exercising the option for UPS.

The enrolment and claim forms for all these categories of Central Government employees will be available online on the website - https://npscra.nsdl.co.in from April 1, 2025.

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