India

After OPS, NPS, UPS has arrived, government employees can now choose a new pension

The Central Government notified about the Unified Pension Scheme (UPS), taking a significant step to ensure financial security of central employees after retirement. This new scheme, which is designed by combining aspects of the Old Pension Scheme (OPS) and the National Pension System (NPS), aims to provide a guaranteed pension to the employees, ensuring financial stability and dignity after retirement. The scheme will be effective from April 1, 2025, as stated in a government notification issued on January 24, 2025.

The Unified Pension Scheme will apply to those central employees who are already enrolled in the National Pension System (NPS). However, the scheme will be available only to those employees who meet certain criteria mentioned in the notification. Employees will have to complete a minimum of 10 years of service to be eligible for this scheme.

Eligibility under UPS

Under UPS, employees will be eligible for an assured payment under the following conditions

Superannuation: Employees who retire after completing at least 10 years of service will receive an assured pension from the date of their retirement.

Retirement under FR 56(j): Employees who retire without any penalty under government provisions will also be eligible for an assured payment from the date of their retirement.

Voluntary Retirement: Employees who opt for voluntary retirement after 25 or more years of service will receive payment starting from the date they reach the age of superannuation while continuing in service.

However, the Unified Pension Scheme will not apply to employees who are dismissed, removed or resign from service. In such cases, they will not be eligible for UPS.

Calculation of payments and benefits

UPS offers several levels of payments based on years of service:

  • Full assured payment: Employees with 25 or more years of service will receive 50 per cent of their average basic pay of the last 12 months of service.
  • Proportionate payment: Employees with less than 25 years of service will receive a proportionate payment based on their service.
  • Minimum assured payment: Employees with 10 or more years of service are assured a minimum payment of Rs 10,000 per month.
  • Additionally, for employees who opt for voluntary retirement after 25 years of service, payments will commence from the date they reach the age of superannuation.

Family payment in case of death

In case of death of the pensioner after superannuation, a family payment will be made. This payment will be 60 per cent of the last admissible payment and will be provided to the legally married spouse of the deceased. The payment will be made as per the date of superannuation, voluntary retirement, or retirement under FR 56(j).

Dearness Relief (DR) and other provisions

Dearness Relief (DR), which is normally applicable to employees in service, will be extended to both assured and family payments under the UPS. DR will be provided once the payments commence. In addition, a lump sum payment of 10 per cent of the monthly wage (basic pay + dearness allowance) will be made for every six months of completed service at the time of superannuation. This lump sum payment will not affect the assured monthly payment.

When will it be implemented

The Unified Pension Scheme will come into full effect from April 1, 2025, giving employees the option to choose between the NPS and the new UPS. It also includes provisions for already retired government employees who opt for this new system. For them, the pension authority will put in place a suitable top-up payment system to ensure a smooth transition to the new framework. The implementation of the UPS is an important step in ensuring that government employees are financially secure in their retirement, bringing together the benefits of both the OPS and the NPS in a structured and assured manner.

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