The Union Finance Ministry has notified the operationalisation of the Unified Pension Scheme (UPS) as an option under the National Pension System (NPS) for Central government employees with effect from April 1, ensuring them guaranteed retirement benefits.
The Unified Pension Scheme shall be applicable to such Central Government employees who are covered under the National Pension System and choose this option. Pension Fund Regulatory and Development Authority (PFRDA) may issue regulations for operationalising UPS, with the effective date set for April 1, 2025.
The UPS will offer 50% of the average basic pay drawn by a Central government employee over the 12 months before retirement, provided they complete 25 years of service. Employees with less than 25 years of service but over 10 years will receive pension on a proportionate basis.
The new pension policy was approved by the Union cabinet led by Prime Minister Narendra Modi on August 24, 2024, for nearly 2.3 million Central government employees. The framework assures 50% of basic pay as a monthly payout, addressing the request of Central government staff unions for guaranteed retirement benefits.
The high-level committee, headed by cabinet secretary-designate T.V. Somanathan, reworked the pension system following grievances with the existing NPS. The move aimed to prevent financial strain on the government, with some states reverting to the previous old pension scheme (OPS) due to political pressure.
As a populist step to secure votes, political parties made the pension system a significant issue in states like Himachal Pradesh, highlighting the importance of guaranteed retirement benefits for government employees.
