Unified Pension Scheme (UPS): Eligibility, Benefits & Returns

The Central Government introduced the Unified Pension Scheme (UPS) on August 24, 2024. Set to be implemented from April 1, 2025, the UPS is expected to benefit 2.3 million Central Government employees. Here is everything you need to know about the UPS, including its details, benefits, and eligibility criteria.

What is Unified Pension Scheme(UPS)?

The Unified Pension Scheme (UPS) is a new initiative launched by the Central Government to ensure financial stability and security for government employees’ post-retirement. This scheme aims to provide a dignified and secure future for its beneficiaries.

Currently, government employees are enrolled in the National Pension System (NPS), but they now have the option to switch to the UPS. However, once employees opt for the UPS, their decision is final and cannot be reversed.

State governments may also choose to implement the UPS for their employees. Maharashtra has become the first state to adopt this scheme, with the cabinet approving its implementation for state government employees on August 25, 2024. If adopted nationwide, the UPS could benefit over 9 million government employees currently under the NPS across India.

The Unified Pension Scheme is a government initiative aimed at simplifying and consolidating various pension plans into a single, unified system. This scheme is designed to provide a streamlined and efficient way for individuals, especially those in the unorganized sector, to secure their financial future post-retirement.

Key details of the Unified Pension Scheme

• Scheme name: Unified Pension Scheme (UPS)
• Announced on: August 24, 2024
• Implementation Date: April 1, 2025
• Beneficiaries: Central Government employees
• Employee Contribution: 10% of basic salary + dearness allowance
• Employer Contribution: 18.5% of basic salary + dearness allowance
• Benefits:
• Pension of 50% of the average basic pay over the last 12 months before retirement for employees with at least 25 years of service.
• Minimum pension of Rs. 10,000 per month for those retiring after a minimum of 10 years of service.

Eligibility for UPS Scheme

• Government employees who have completed at least 10 years of service are eligible for a fixed pension amount.
• Those who have completed at least 25 years of service are eligible to receive a percentage of their average basic pay as a pension.
• Employees currently covered under the National Pension System (NPS) or opting for the Voluntary Retirement Scheme (VRS) under NPS.

Minimum pension amount

The UPS guarantees a minimum pension of Rs. 10,000 per month for government employees who retire after completing at least 10 years of service.

Benefits of the UPS scheme

1. Assured pension: Employees retiring after at least 25 years of service will receive a pension equal to 50% of their average basic pay over the last 12 months before retirement. Proportionate pension benefits are available for those with service periods between 10 and 25 years.
   
   
2. Government contribution: The government will contribute 18.5% of the employee’s basic salary to the pension fund, while employees will contribute 10%.
   
   
3. Family Pension: In the event of a pensioner’s death, 60% of the pension amount received before death will be given to the spouse.
   
   
4. Minimum pension: A minimum pension of Rs. 10,000 per month for employees who have completed at least 10 years of service.
   
   
5. Inflation protection: Pensions will be adjusted for inflation based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to other service employees.
   
   
6. Lump sum payment: Upon retirement, employees will receive a lump sum payment along with their gratuity. This payment will be equal to one-tenth of the monthly salary (basic pay + DA) for every six months of completed service and will not affect the assured pension amount.

Returns under UPS scheme

The UPS scheme assures a guaranteed pension amount for government employees upon retirement. Employers will contribute 18.5% of the basic salary plus dearness allowance, while employees will contribute 10% of the same.

For employees who retire after a minimum of 25 years of service, the pension will be 50% of their average basic pay drawn during the 12 months preceding retirement. Those who retire after a minimum of 10 years of service will receive a pension of Rs. 10,000 per month post-retirement.