Centre announces unified pension scheme for retired NPS subscribers

The new scheme provides a guaranteed monthly pension, lump sum payout, and interest-bearing arrears for NPS subscribers who retired on or before 31 March 2025

The Union government has rolled out the Unified Pension Scheme (UPS), offering enhanced pension benefits to retired subscribers of the National Pension System (NPS). The scheme applies to those who retired on or before 31 March 2025, with at least 10 years of qualifying service. If the subscriber is deceased, their legally wedded spouse is also eligible to receive these benefits.

 

The UPS provides supplementary benefits in addition to the existing NPS entitlements. These include a one-time lump sum payment, a monthly top-up pension, and interest on any arrears.

 

Under the scheme, eligible retirees will receive a lump sum amount calculated as one-tenth of their last drawn basic pay plus dearness allowance for every completed six-month period of qualifying service. The scheme covers various forms of retirement, including superannuation, voluntary retirement, and retirement under Fundamental Rule (FR) 56(j). 

 

If the annuity received under the NPS is lower than the guaranteed pension promised by UPS, the government will pay a monthly top-up to cover the shortfall. Furthermore, beneficiaries can claim arrears along with simple interest, calculated at the prevailing Public Provident Fund (PPF) interest rate.

 

UPS came into effect on 1 April 2025, aiming to bring greater certainty to pension payouts by guaranteeing a fixed monthly pension — thus addressing the inherent variability of NPS returns. For retirees with 25 years or more of qualifying service, the scheme ensures a pension equal to 50 per cent of the average basic pay drawn during the last 12 months of service.

 

The Pension Fund Regulatory and Development Authority (PFRDA) issued the UPS Regulations, 2025, on 19 March, outlining eligibility criteria and the process for claiming benefits. To assist retirees and stakeholders, PFRDA is also conducting webinars and informational sessions on the new scheme.