Unified Pension Scheme for central govt employees begins: What to know

It guarantees a minimum pension of Rs 10,000 per month for employees who complete at least 10 years of government service

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The Unified Pension Scheme (UPS) for central government employees was implemented on Tuesday. The scheme is an option under the National Pension System (NPS) and the Pension Fund Regulatory and Development Authority (PFRDA) recently notified regulations for it.

 

Who is eligible for NPS?

 

According to PFRDA’s notification, the following Central government employees are eligible to participate in the UPS:

 

Existing central government employees: Those who are in service as of April 1, 2025, and are already covered under the NPS.

 

New recruits: Individuals joining Central Government services on or after April 1, 2025. They must opt for the scheme within 30 days of their joining.

 

Retired employees: Central Government employees previously covered under NPS who have superannuated, voluntarily retired, or retired under Fundamental Rules 56(j) (provided the retirement is not considered a penalty under the Central Civil Services (Classification, Control and Appeal) Rules, 1965) on or before March 31, 2025.

 

Spouses of deceased subscribers: The legally wedded spouse of a subscriber who had superannuated or retired and passed away before opting for UPS.

 

It is important to note that once the decision to opt for UPS is made, it will be considered ‘final and irrevocable,’ meaning there will be no option to revert or make changes afterward.

 

Assured payout calculation under UPS

 

The rate of full assured payout will be 50 per cent of 12 monthly average basic pay, immediately prior to superannuation. Full assured payout is payable after a minimum 25 years of qualifying service. In case of lesser qualifying service period, proportionate payout would be admissible.

 

A minimum guaranteed payout of Rs 10,000 per month shall be assured in case superannuation is after 10 years or more of qualifying service subject to timely and regular credit of contributions and no withdrawals. In cases of voluntary retirement after a minimum 25 years of qualifying service, assured payout will commence from the date on which the employee would have superannuated if he had continued in service.

 

What is the family payout under UPS

 

In case of death of the payout holder after superannuation, family payout 60 per cent of the payout admissible to the payout holder immediately before his demise, shall be assured to the legally wedded spouse (spouse legally wedded as on the date of superannuation or on the date of voluntary retirement or retirement under FR 56(j), as may be applicable).

 

Is there any provision for inflation protection under UPS?

 

Dearness Relief shall be available on the assured payout and family payout, as the case may be. The dearness relief will be worked out in the same manner as dearness allowance applicable to serving employees. Dearness relief will be payable only when payout commences.

 

What is the rate of contribution of employees and the central government under UPS?

 

The contribution of employees will be 10 per cent of (basic pay + dearness allowance). The matching Central government contribution will also be 10 per cent of (basic pay + dearness allowance). Both will be credited to each employee’s individual corpus. Further, Central Government shall provide an additional contribution of an estimated 8.5 per cent of (basic pay + Dearness Allowance) of all employees who have chosen the UPS option, to the pool corpus on an aggregate basis. The additional contribution is for supporting assured payouts under the UPS option.