The Central Government has introduced a new pension scheme, the Unified Pension Scheme (UPS), which guarantees an assured pension, family pension, and a minimum pension for government employees. Under this scheme, employees will receive a pension amounting to 50% of their average basic pay from the last 12 months before retirement, provided they have completed a minimum of 25 years of service. For those with fewer years of service, the pension will be adjusted proportionally.

Key Features of the Unified Pension Scheme (UPS)

• Guaranteed Pension: Employees will receive 50% of their average basic pay over the last 12 months prior to retirement.
• Family Pension: In the event of the employee’s death, their family will receive 60% of the pension the employee was entitled to.
• Minimum Pension: A minimum pension of Rs 10,000 per month is assured upon retirement after a minimum of 10 years of service.

Additional Benefits and Flexibility

Railways Minister Ashwini Vaishnaw, while announcing the scheme, stated that it would benefit about 23 lakh central government employees. In addition to the pension and family benefits, the scheme offers a lump-sum payment at the time of retirement, which includes gratuity and one-tenth of the monthly emolument (basic pay + DA) for every completed six months of service. This payment will not affect the quantum of the assured pension.

Option Between UPS and NPS

Government employees will have the option to choose between the existing National Pension System (NPS) and the new Unified Pension Scheme (UPS), giving them greater flexibility in their retirement planning. The Union Cabinet has already approved the scheme, marking a significant step towards providing a more secure retirement for government employees.

The Central Government previously stated that there are no immediate plans to reinstate the Old Pension Scheme (OPS) for its employees, despite ongoing protests in states not governed by the BJP demanding its implementation.

The OPS is a defined benefit scheme that promises retirees a lifelong pension equal to half of their last drawn salary, with adjustments based on pay commission recommendations. In contrast, NPS is a defined contribution plan where government employees contribute 10% of their basic salary, and the government contributes 14%.

The Unified Pension Scheme (UPS) will come into effect on April 1, 2025, with an implementation cost of ₹6,250 crore in its first year. This scheme will apply to all individuals who retired under the NPS since 2004.