Sat Jan 25 18:02:30 UTC 2025: ## Government Announces Unified Pension Scheme for Central Employees

**New Delhi, Jan 27:** The Indian government has announced a new Unified Pension Scheme (UPS) offering a guaranteed pension for central government employees, effectively reviving a key feature of the old pension system. The scheme, notified by the Finance Ministry on Saturday and effective from April 1, 2025, will provide a minimum pension of 50% of an employee’s average basic pay over the final 12 months of service, subject to a 25-year minimum service period.

The UPS will be an option for the approximately 2.3 million central government employees currently enrolled in the National Pension System (NPS). Employees can choose between the assured payout under UPS and the market-linked returns of the existing NPS. For those with less than 25 years of service, a proportionate pension will be paid, with a minimum guaranteed monthly payout of ₹10,000 after 10 years of service.

In cases of voluntary retirement after 25 years of service, the pension will begin from the date of expected superannuation. Upon the death of the pensioner, the spouse will receive a pension of 60% of the deceased’s payout. Both the pension and the family pension will include dearness relief, calculated similarly to that for serving employees.

The government will increase its contribution to the scheme to 18.5% from the current 14%, while employees will contribute 10% of their basic salary and dearness allowance. This is in contrast to the old pension scheme (OPS), which predates the NPS and provided a 50% pension based on the last drawn basic pay, but did not require employee contributions. The UPS, unlike the OPS, links the final payout to market returns on invested capital, primarily government debt.

The move comes after several states opted to reinstate the OPS, citing the NPS’s lower attractiveness. The government formed a committee in April 2023 to address concerns and improve the NPS framework, leading to the introduction of the UPS. The Pension Fund Regulatory and Development Authority will issue further regulations for implementing the scheme.

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