The central government has announced a new pension scheme which will be applicable from 1 April 2025. This new scheme will be known as Unified Pension Scheme (UPS). The main objective of UPS is to provide better financial security to government employees after retirement. This scheme will be an alternative to the existing National Pension System (NPS).
Under UPS, government employees will get guaranteed pension after retirement. This pension will be 50% of their last 12 months average basic salary. Apart from this, the scheme also includes many other benefits such as minimum pension guarantee, family pension, and inflation protection.
Integrated Pension Scheme (UPS) Overview
| Speciality | Description |
| Date of implementation | 1 April, 2025 |
| Eligibility | Central government employees coming under NPS |
| Guaranteed pension | 50% of the last 12 months average basic salary |
| Minimum service | 25 years for full profit, minimum 10 years |
| Minimum pension | ₹ 10,000 per month (after 10 years of service) |
| Employee contribution | 10% of Basic Salary + DA |
| Government contribution | 18.5% (increased from 14%) |
| Family pension | 60% pension to spouse after death |
The main advantage of UPS
- Guaranteed Pension: Under UPS, employees have been guaranteed to get a fixed amount pension after retirement. This amount will be 50% of their last 12 months average basic salary.
- Minimum pension: Employees who retire after service of at least 10 years will get a pension of at least ₹ 10,000 per month.
- Family Pension: After the death of the pensioner, his spouse will continue to get 60% of the pension.
- Inflation security: The pension amount will be adjusted according to inflation, such as Dearness Relief (DR) for serving employees.
- Lump sum payment: At the time of retirement, employees will get a lump sum amount in addition to gratuity.
Difference between UPS and NPS
UPS is an alternative to NPS that provides more protection to employees. There are some major differences here:
- Guaranteed Pension: The pension amount in UPS is already fixed, while in NPS it depends on the performance of the market.
- Government contribution: Government contributes 18.5% to UPS, which is more than 14% of NPS.
- Minimum pension: UPS has a minimum pension guarantee of ₹ 10,000 per month, which is not in NPS.
- Flexibility: Investment options in NPS have more flexibility, while UPS is a fixed profit plan.
Eligibility for UPS
- Current NPS Employees: All central government employees under NPS can opt for UPS.
- New Employees: Employees appointed after 1 April 2025 can also choose one of the UPS or NPS.
- Retired Employees: Employees already retired under NPS will also get the benefits of UPS.
Contribution to UPS
- Employees contribution: Employees have to contribute 10% of their basic salary and Dearness Allowance (DA).
- Government contribution: The government will contribute 18.5%, which is more than 14% earlier.
- Additional Fund: The government will contribute 8.5% to a separate pool fund.
Calculation of pension under UPS
- Full Pension: After serving 25 years or more, the employee will get 50% pension of the last 12 months average basic salary.
- Proportional pension: For 10 to 25 years of service, pension will be reduced proportionally.
- Minimum pension: After a minimum service of at least 10 years, a minimum pension of ₹ 10,000 per month is guaranteed.
Other important provisions of UPS
- Dearness Relief: Dearness Relief will be available on pension, which will be based on All India Consumer Price Index for Industrial Workers (AICPI-IW).
- Voluntary Retirement: After 25 years of service, employees taking voluntary retirement will also get the benefits of UPS.
- Outstanding amount: Pre -retired NPS employees will be given the outstanding amount for the previous time with interest at PPF rates.
- Final Options: Once choosing UPS, employees cannot go back to NPS.
Importance of UPS
- Financial security: UPS provides better financial security to government employees after retirement.
- Certainness: Guaranteed pension protects employees from future uncertainties.
- Family Security: Family Pension Provision provides security to the employee’s family even after his death.
- Inflation security: Pension is protected from inflation through Dearness Relief.
Effect of UPS
- Employees satisfaction: Guaranteed pension will bring more satisfaction and inspiration among employees.
- Government spending: The government’s spending on pension will increase due to UPS, but it can be considered a long -term investment.
- Improvement in pension system: UPS, NPS and Old Pension Scheme establishes a balance.
- Economic Effect: Better pension will increase the purchasing power of retired employees, which can speed up the economy.
Disclaimer: This information is based on government announcements and available reports. UPS is a real plan that will be applicable from 1 April 2025. However, its implementation and effect can be fully evaluated with time. Employees are advised to get official information from their department.
