New Delhi: A significant change is set to revolutionize the pension landscape for government employees in India. The Central Government, under the leadership of Prerna Gupta, has introduced a new Unified Pension Scheme (UPS), effective from April 1, 2025. This scheme promises substantial benefits for central government employees, with its full impact expected to be seen from August 1, 2025. This move is being hailed as a major gift for those in or entering government service.
What is the Unified Pension Scheme (UPS)?
The Unified Pension Scheme (UPS) aims to combine the best features of the Old Pension Scheme (OPS) and the New Pension Scheme (NPS) to create a robust and reliable retirement system. Under UPS, government employees will now be guaranteed 50% of their last drawn salary as pension after retirement.
For instance, if an employee’s last salary was ₹90,000, they would receive a guaranteed pension of ₹45,000 per month. This addresses the long-standing demand for a more secure and predictable pension.
Who Will Benefit from UPS?
The scheme is applicable to all central government employees currently under NPS.
- New entrants: For those joining government service after April 1, 2025, UPS will be automatically applicable.
- Existing NPS subscribers: Employees currently under NPS will have the option to switch to UPS until September 30, 2025. Once UPS is chosen, there will be no option to revert to NPS.
Pension Calculation and Contribution Details
Pension Entitlement:
- Employees with 25 years or more of service will receive 50% of their average basic salary from their final year as pension.
- Those with 10 to 24 years of service will receive a proportionate pension based on their service duration.
- Employees who have completed at least 10 years of service will be guaranteed a minimum pension of ₹10,000 per month.
Contribution Structure:
- Employees will contribute 10% of their basic salary + Dearness Allowance (DA) to the scheme.
- The government will also contribute an equivalent matching amount to the employee’s pension fund, ensuring a larger corpus at retirement.
Inclusion of Family Pension and State Adoption
The UPS also includes a family pension provision. If a retired employee passes away, their family will continue to receive 60% of the pension. This family pension will first go to the spouse, and then to children or parents. A minimum amount has also been set for family pension to ensure financial stability for the dependents.
Currently, UPS is applicable only to central government employees. However, state governments have been given the option to adopt this scheme. Maharashtra has already become the first state to adopt UPS, and discussions are ongoing with other states. If all states implement UPS, over 90 lakh government employees could benefit.
Application Process and UPS Advantages
The government has streamlined the application process for UPS:
- Online: Applications can be submitted through the PRATIAN e-Governance Technologies portal.
- Offline: Employees can fill Form A1 (for new employees) or Form A2 (for existing employees) from their respective DDO offices and submit them.
The government aims to soon make the entire process digital and paperless.
Key Advantages of UPS:
- Guaranteed pension like OPS.
- Contribution-based like NPS.
- Minimum guaranteed pension of ₹10,000.
- Family pension provision.
- Ensures a dignified retirement for every employee.
The government’s objective is to ensure that employees do not face financial hardship after retirement and can maintain a good standard of living. This scheme promises a robust and reliable pension system that will secure the financial future of millions of government employees.
