The Unified Pension Scheme (UPS) is a new pension plan introduced by the Indian government to offer better financial security for government employees. It was approved on August 24, 2024, and will be effective from April 1, 2025. The UPS is set to benefit around 2.3 million central government employees and could extend to 9 million if state governments adopt it.
Guaranteed Pension: Employees will receive 50% of their average basic pay from the last 12 months before retirement, provided they have served at least 25 years. For those with less service, the pension will be proportionate, with a minimum of 10 years of service required to qualify.
Minimum Pension: The scheme guarantees a minimum pension of ₹10,000 per month for those who have worked for at least 10 years.
Family Pension: If an employee passes away, their family will get 60% of the pension amount the employee was entitled to at the time of death.
Inflation Adjustment: The pension will be adjusted for inflation based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), ensuring the pension keeps its value over time.
Lump Sum Payment: Upon retirement, employees will receive a lump sum equal to 1/10th of their monthly salary (including basic pay and dearness allowance) for every six months of service.
Contributions: Employees will contribute 10% of their basic salary to the pension, while the government will contribute 18.5%. This is different from the Old Pension Scheme (OPS), which didn’t require employee contributions.
The UPS combines benefits from both the Old Pension Scheme (OPS) and the National Pension System (NPS). The OPS gave a fixed pension without employee contributions, while the NPS was based on contributions and linked to market performance, which could be risky for employees.
The UPS is designed to be more sustainable than the OPS while still providing a guaranteed pension. It offers stability and predictability, making it a better choice for employees looking for reliable retirement benefits.
For more detailed information, visit the UPS Pension Scheme website: UPS Pension Scheme.