Central Govt notifies Unified Pension Scheme for Government Staff effective April 1, 2025

The Finance Ministry announced on Saturday the Unified Pension Scheme (UPS), which guarantees a pension of 50% of the average basic income drawn in the previous 12 months prior to superannuation.

According to a gazette notification released by the Finance Ministry, the UPS will apply to Central Government employees who are covered by the National Pension System and choose this choice.

As per the notification published on Saturday, UPS or assured payout will not be accessible in the event of an employee’s removal, dismissal, or resignation.

According to the January 24 notification, the rate of full assured payout would be 50% of the 12-month average basic pay immediately prior to superannuation, subject to a minimum qualifying service of 25 years against a market returns-linked payout under the NPS.

The notification will allow 23 lakh government employees to choose between UPS and NPS, which went into force on January 1, 2004.

In the event of a shorter qualifying service time, the proportionate payout would be permitted, it stated, adding that a minimum guaranteed payout of Rs.10,000 per month would be guaranteed if superannuation occurs after ten years or more of qualifying service.

The Unified Pension Scheme would become operative on April 1, 2025. In the event of voluntary retirement after a minimum of 25 years of qualifying service, the assured payout will begin on the date on which the employee would have superannuated if he had continued in service, it stated.

“In case of death of the payout holder after superannuation, family payout at the rate of 60% of the payout admissible to the payout holder, right away before his demise, will be assured to the legally wedded spouse (spouse legally wedded as on the date of superannuation or on the date of voluntary retirement or retirement under FR 56(j), as may be applicable,” it said.

Dearness Relief will be offered on the assured payout and family payout, as appropriate, it stated, and will be calculated in the same way as Dearness Allowance for serving employees. Dearness Relief is based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), as is the case with service employees.

“The existing Central Government Employees under National Pension System (NPS), on the effective date of implementation of the UPS option, as well as the future employees of Central Government can choose to either take the Unified Pension Scheme option under the NPS or continue with the NPS without the Unified Pension Scheme option,” according to the announcement.

When an NPS-covered employee who is still in service on the effective date of the UPS option’s implementation exercises the UPS option, the outstanding corpus in the employee’s Permanent Retirement Account Number is transferred to the employee’s individual corpus under the Unified Pension Scheme, according to the statement.

The Head of Office where the employee works will decide his or her qualifying service under the UPS option at superannuation or retirement, according to the statement.

The Pension Fund Regulatory and Development Authority may issue regulations to operationalise the Unified Pension Scheme.

The UPS will boost the government’s contribution from 14% to 18.5% beginning April 1, 2025.

Prime Minister Narendra Modi chaired the Union Cabinet, which approved the UPS on August 24, 2024. Employees received a pension of 50% of their last drew basic salary under the old pension scheme (OPS), which was effective before to January 2004.

Unlike the old pension scheme, UPS is contributory in nature, with employees contributing 10% of their basic pay and dearness allowance, and the employer (the central government) contributing 18.5%.

However, the eventual payout is determined by the market returns on the corpus, which is primarily invested in government debt.

Employees in the OPS were not required to make any contributions. They did, however, contribute to the General Provident Fund. The cumulative amount, including with interest, was paid to the employee upon retirement.

Because the NPS was less appealing than the OPS, several non-BJP-ruled states opted to return to the old pension scheme, which provided a DA-linked benefit.

This caused the Centre to appoint a committee in April 2023, led by former Finance Secretary and now Cabinet Secretary-designate TV Somanathan, to make improvements to the NPS architecture.

For Official Notification Download PDF Given Below: