The Unified Pension Scheme (UPS) 2025 marks a significant evolution in ensuring financial security for central government employees post-retirement. This scheme, effective from April 1, 2025, replaces the National Pension System (NPS) with a more predictable and secure pension plan, addressing longstanding demands for a pension structure similar to the Old Pension Scheme (OPS), thereby offering a stable retirement income.
In response to demands for reinstating OPS-like benefits, the UPS provides a guaranteed pension equating to 50% of the average basic salary during the last 12 months for those with at least 25 years of service. The government has increased its contribution from 14% to 18.5%, along with an additional 8.5% pooled contribution. This initiative is expected to benefit approximately 20 lakh central government employees, with a financial outlay of INR 1.2 lakh crore over the next decade.
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What is the Unified Pension Scheme
The Unified Pension Scheme (UPS) is a pension plan designed to provide central government employees with a reliable and predictable pension after retirement. This scheme addresses the key drawbacks of the National Pension System (NPS), which was often criticized for its reliance on market performance and lack of guaranteed pension benefits. Unlike the NPS, the UPS operates as a defined benefit scheme, ensuring a fixed pension amount based on an employee’s salary history rather than fluctuating market investments.
Under the UPS, employees are guaranteed a pension equal to 50% of their average basic salary from the last 12 months of service, provided they have served for 25 years or more. This move aligns with longstanding demands for a pension system reminiscent of the Old Pension Scheme (OPS), offering employees peace of mind regarding their post-retirement financial security. Moreover, the government has increased its contribution from 14% to 18.5%, complemented by an additional 8.5% pooled contribution, enhancing the system’s sustainability and employee benefits.
This scheme reflects a broader government effort to enhance social security, ensuring that public servants can retire with dignity and economic stability. By securing the financial future of approximately 20 lakh central government employees, the UPS is expected to boost job satisfaction, reduce turnover, and foster a stable workforce committed to public service.
Overview of UPS Scheme
| Feature | Details |
|---|---|
| Launch Date | April 1, 2025 |
| Employee Contribution | 10% of basic salary + Dearness Allowance |
| Government Contribution | 18.5% of basic salary + DA |
| Additional Government Fund | 8.5% pooled contribution |
| Assured Pension | 50% of average basic pay (last 12 months) for >=25 years of service |
| Minimum Service Requirement | 10 years for the minimum guaranteed payout |
| Family Pension | 60% of employee’s pension post-death |
| Total Impacted Employees | Approximately 20 lakh |
| Financial Outlay | Estimated INR 1.2 lakh crore over the next decade |
| Additional Benefits | Lump sum payment upon superannuation, calculated as 10% of monthly emoluments per six months of service |
Key Features of the Scheme
- Assured pension at 50% of the average basic salary from the last 12 months for 25+ years of service.
- Pro-rated pension for those with 10 to 25 years of service.
- Enhanced government contribution at 18.5%.
- Includes an additional pooled government fund of 8.5%.
- Minimum assured pension of INR 10,000 per month.
- Family pension at 60% of the employee’s pension post-death.
Eligibility Criteria
- Current central government employees under NPS can opt for UPS.
- Minimum service of 25 years for a full assured pension, or at least 10 years for a pro-rated payout.
- Benefits available for those opting for voluntary retirement after 25 years.
- Active choice required to switch from NPS to UPS.
UPS Pension Scheme Withdrawal Rules
- Partial withdrawals are allowed after a three-year lock-in period, limited to 25% of contributions.
- Full withdrawals are permitted upon retirement, based on the service duration.
UPS Pension Calculation
- Full pension is calculated at 50% of the average basic salary for the last 12 months for 25+ years of service.
- Proportional pension is provided on a sliding scale for 10-24 years of service.
- A minimum guaranteed pension of INR 10,000 monthly for those with at least 10 years of service.
Unified Pension Scheme vs NPS
| Feature | UPS | NPS |
|---|---|---|
| Scheme Type | Defined Benefit | Defined Contribution |
| Pension Amount | 50% of last drawn salary | Based on accumulated corpus and market performance |
| Government Contribution | 18.5% | 14% |
| Employee Contribution | 10% | 10% |
| Risk | Low (Guaranteed Pension) | High (Market-linked returns) |
| Family Pension | 60% of the employee’s pension | Based on accumulated corpus |
| Inflation Protection | Dearness Relief similar to DA for active employees | Dependent on corpus growth |
| Withdrawal Flexibility | Limited, with specific conditions | More flexible, based on accumulated funds |
| Contribution Pooling | Includes additional pooled government fund (8.5%) | No pooling, entirely individual investment-based |
| Minimum Guaranteed Pension | INR 10,000 for those with 10+ years of service | No guaranteed minimum, based on corpus |
| Switching Flexibility | Fixed once opted; no reversal to NPS | Can change investment options within NPS guidelines |
How to Join the Unified Pension Scheme
To join the Unified Pension Scheme (UPS), central government employees must first ensure they are eligible, meaning they are currently under the National Pension System (NPS). Applications need to be submitted between April 1, 2025, and June 30, 2025, while newly recruited employees must apply within 30 days of their joining date. Applicants can choose the appropriate forms: Form A2 for existing employees, Form A1 for new recruits, Form B2 for retirees, and Form B6 for spouses of deceased pensioners. Applications can be submitted online or through the Drawing and Disbursing Officer (DDO).
UPS Enrolment and Claim forms (Direct Link)
- Enrolment and claim forms are available online from April 1, 2025.
- Visit Protean CRA’s official website at npscra.nsdl.co.in to access forms.
- Options to submit forms both online and physically are available.
Switching in the Unified Pension Scheme
- Annual pension fund changes allowed once per year.
- Modify investment choices twice per year.
- Default investment pattern applied if no choice is made.
- Options include conservative bonds to lifecycle funds with equity.
- Adjust investments based on market and personal risk.
- Follow PFRDA guidelines for changes.
Official Drafts and FAQ
FAQs
Who is eligible for UPS?
Central Government employees under NPS who opt for UPS.
Can I switch back to NPS after opting for UPS?
No, the decision to switch to UPS is final.
What is the minimum service requirement for an assured payout?
A minimum of 10 years of service is required.
Are past retirees under NPS eligible for UPS?
Yes, they will receive equivalent benefits under UPS.
Is there an inflation adjustment in UPS?
Yes, Dearness Relief, similar to the DA for active employees, is applicable.