'Unified Pension Scheme' approved by Centre | Here are key features of UPS

Follow us on

Unified Pension Scheme: In a significant decision impacting lakhs of employees, the Bharatiya Janata Party (BJP)-led central government today (August 24) approved the Unified Pension Scheme (UPS) which provides for Assured Pension and Assured Family Pension.

Briefing the media after a meeting of the union cabinet, Information and Broadcasting Minister Ashwini Vaishnaw said about 23 lakh employees of the central government would benefit from the Unified Pension Scheme (UPS).

The cabinet meeting was chaired by Prime Minister Narendra Modi. The employees will have the choice to continue with the National Pension Scheme or UPS.

"Today the Union Cabinet has approved the Unified Pension Scheme (UPS) for government employees providing for the assured pension. 50 per cent assured pension is the first pillar of the scheme, second pillar will be assured family pension. About 23 lakh employees of the central government would benefit from the Unified Pension Scheme (UPS). There will be an option for the employees to opt between NPS and UPS," he said.

Key features of the Unified Pension Scheme

1. Assured Pension

• 50 per cent of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years.
• Proportionate for lesser service period upto a minimum of 10 years of service.

2. Assured Family Pension

• 60 per cent of pension of the employee immediately before her or his demise.

3. Assured Minimum Pension 

• 10,000 per month on superannuation after a minimum of 10 years of service.

4. Inflation Indexation

• On assured pension, on assured family pension and assured minimum pension.
• Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of serving employees. 

5. Lump-Sum payment at superannuation in addition to gratuity.

• 1/10th of monthly emolument (pay + DA) as on the date of superannuation for every completed six months of service.
• This payment will not reduce the quantum of assured pension.

Other salient features of UPS

1. Provisions of UPS will apply to past retirees of NPS (who have already superannuated).
2. Arrears for the past period will be paid with interest at PPF rates.
3. UPS will be available as an option to the employees. Existing as well as future employees will have the option of joining NPS or UPS. Choice, once exercised, will be final.
4. Employee contribution will not increase. The government will provide additional contributions for implementing UPS.
5. Government contribution increased from 14 per cent to 18.5 per cent

Implementation of UPS 

1. UPS to be given effect from April 1, 2025
2. Support mechanism and necessary legal, regulatory and accounting changes will be readied.
3. UPS is being implemented by the Central Government Benefiting 23 lakh Central Government employees.
4. The same architecture has been designed for adoption by State governments.
5. If also adopted by State governments it can benefit over 90 lakh government employees who are presently on NPS.