SUMMARY
- Unified Pension Scheme (UPS) approved for central government employees, operational from April 2025.
- UPS offers stable pensions based on length of service and last drawn basic pay, with the option to switch from NPS.
- The scheme includes a minimum pension of Rs 10,000, family pension at 60%, and a one-time payout at retirement.
The Union Cabinet, chaired by PM Narendra Modi approved the Unified Pension Scheme (UPS) for central government employees on Saturday. The new scheme will be made operational from April 1, 2025 and bring a benefit to as many as 23 lakh of the central government employees.
The UPS will ensure the “dignity and financial security” of employees, stated PM Modi. On X, he wrote that all government employees deserve to be commended for their efforts in contributing towards the development of our country.
Earlier, the Central Government provided pension to its workers only after they completed fifteen years of service and had tapered payments along with a flat monthly rate which meant that some would get more than others. With Unified Pension Scheme(UPS) at place by now there is no such concern as this provides all govt employees a stable lifetime pension dependent on their length of service & last drawn basic pay (+ dearness allowance will be considered-every 6 months for calculation in accordance to consumer price index).
As per media reports, the central government employees will be given an option to choose between the Unified Pension Scheme (UPS) and NPS. Further, existing NPS Subsciber of the central government shall have an option to migrate to UPS. Apart from this, shortly after that state governments will also be able to choose and implement the Unified Pension Scheme.
A Times of India news report quoted cabinet secretary-designate T V Somanathan as saying that an actuarial calculation would be done every three years so the burden does not become unfunded, like in OPSwhere government had to foot the entire bill without employees contributing anything.
Last month, the Times of India news report said Indian Minister for Information and Broadcasting Ashwini Vaishnaw announced implementation of UPS’s “five pillars” would be phased in April. Vaishnaw also said that those who work 10 years will get a minimum pension of Rs 10,000 while the family pension for spouse has been fixed at 60% of the deceased government employee’s defence pension.
This also includes a one-time payment equal to 10% of the salary and Dearness Allowance (DA) for every six months of service on retirement. The minister said, “After completing 30 years of service a lump sum amount equal to about six months’ salary will be paid at the time of retirement” and clarified that this payment is over and above gratuity.
