Unified Pension Scheme to roll out from April 1; Know how it offers best of OPS & NPS

From April 1, 2025, Central government employees with at least 25 years of service will be eligible for a fixed pension equal to 50% of their average basic salary from the last 12 months before retirement under the Unified Pension Scheme (UPS).

Key Features of the Unified Pension Scheme (UPS)

Eligibility: Employees with 25+ years of service will get a guaranteed pension, while those with 10-25 years of service will receive a minimum pension of ₹10,000 per month.

Family Pension: In case of the pensioner’s death, their family will receive 60% of the last pension drawn as a family pension.

Switch Option: Existing employees under the National Pension System (NPS) will have the option to switch to the UPS.

Design of UPS: A Hybrid Model

The UPS is designed as a hybrid model, incorporating elements from both the Old Pension Scheme (OPS) and the NPS:

Unlike the NPS, which is market-linked and offers variable returns, the UPS ensures a fixed, guaranteed pension amount.

The OPS, which was replaced by NPS in 2004, provided fully government-backed pensions, offering regular dearness allowance adjustments.

Addressing Concerns and Providing Stability

The introduction of the UPS aims to address growing concerns among government employees about the uncertainty of the NPS. Many employees have been calling for a predictable pension system to ensure financial stability post-retirement.

This new system balances the need for employee security with the government's fiscal responsibilities.

Impact on State Governments and Employee Preferences

State governments may also look at this model for their own employees. For those with over 25 years of service, the 50% guaranteed pension will be a significant benefit, while those with fewer years should assess their financial goals and risk tolerance before making a choice.

UPS: Ideal for those seeking a stable, predictable income post-retirement.

NPS: More suited for employees willing to accept market risks for potentially higher returns.

Operationalisation and Enrolment Process

The Pension Fund Regulatory and Development Authority (PFRDA) has officially notified the operationalisation of the UPS under NPS Regulations 2025. The scheme will cover three categories of Central government employees:

Existing employees (in service as of April 1, 2025, covered under the NPS).

New recruits joining Central government services on or after April 1, 2025.

Retired employees or their legally wedded spouses, eligible for UPS.

Enrolment and claim forms for these categories will be available online on the official website:

https://npscra.nsdl.co.in starting April 1, 2025.

(With IANS Inputs)