UPS Unified Pension Scheme is a newly introduced pension policy designed for central government employees. This policy guarantees a secure retirement by ensuring an assured pension, a family pension in case of the employee’s demise, and a guaranteed minimum pension for all central government employees.
What is Unified Pension Scheme (UPS):-
The Unified Pension Scheme (UPS) was approved in a Cabinet meeting chaired by Prime Minister Narendra Modi. This new scheme is designed to provide central government employees with an assured pension, a family pension in the event of the employee’s passing, and a guaranteed minimum pension. The implementation of the UPS is set to begin on April 1, 2025, ensuring enhanced financial security for central government employees after their retirement.
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Who is eligible for the Unified Pension Scheme (UPS)
Central government employees who have completed a minimum of 25 years of service will receive an assured pension, amounting to 50% of their average basic pay from the last 12 months before retirement. For employees with less than 25 years of service, the pension will be adjusted proportionally based on their tenure, with the minimum qualifying service period set at 10 years.
In the unfortunate event of an employee’s death, their spouse will receive a family pension, guaranteed at 60% of the pension amount that the employee was receiving before their passing.
What will be the Minimum Pension of the Unified Pension Scheme (UPS)
The Unified Pension Scheme (UPS), guarantees a minimum pension of ₹10,000 per month for central government employees who retire with at least 10 years of service.
This scheme will provide a pension equal to 50% of the average basic pay drawn in the last 12 months for employees with 25 years or more of service. For shorter service periods, the pension will be proportionally reduced
What are the benefits of Unified Pension Scheme (UPS)
The Unified Pension Scheme (UPS) offers government employees several key benefits. It guarantees an assured pension of 50% of the average basic salary for employees with at least 25 years of service, with a minimum pension of ₹10,000 for those with 10 years of service. It also provides a guaranteed family pension of 60% of the retiree’s pension, inflation-linked adjustments, and a lump sum payment at retirement. The scheme ensures financial security with predictable post-retirement income, allowing employees to opt between the UPS and NPS
What is the difference between Unified Pension Scheme (UPS) and the National Pension System (NPS)
| Aspect | Unified Pension Scheme (UPS) | National Pension System (NPS) |
| Pension Calculation | 50% of the average basic salary drawn in the last 12 months for employees with 25+ years of service. Proportionally reduced for lesser service (minimum 10 years). Guaranteed minimum pension of ₹10,000/month. | There is no guaranteed pension. Pension depends on the corpus accumulated and the annuity purchased. |
| Employee Contribution | 10% of basic salary + Dearness Allowance (DA) | 10% of basic salary + DA |
| Government Contribution | 18.5% of basic salary + DA | 14% of basic salary + DA |
| Guaranteed Pension | Yes, with a guaranteed minimum of ₹10,000/month | No guaranteed pension, market-dependent returns |
| Family Pension | 60% of the last drawn pension after the retiree’s death | Available only if the employee opts for an annuity plan that includes family pension |
| Lumpsum Payment | 1/10th of monthly emoluments for every completed six months of service, in addition to gratuity | Up to 60% of the accumulated corpus can be withdrawn at retirement |
| Inflation Indexation | Yes, pension increases with inflation based on the AICPI-IW | No automatic inflation adjustment |
| Nature of the Scheme | Defined benefit scheme with guaranteed payouts | Defined contribution scheme with market-linked returns |
When will UPS(Unified Pension Scheme) be implemented
- The implementation of the UPS will commence on April 1st 2025.
- Preparation for the support mechanism, along with the requisite legal, regulatory and accounting modification are underway.
- The central government is over seeing the execution of the UPS will be advantage approximately 2.3 million Central Government employees.
- A similar framework has been established and adopted by State Governments, which will be benefit more than 9 million State Government employee currently involved in the NPS.
