UPS: Centre brings in Unified Pension System as an option to NPS for central govt employees; check benefits, eligibility

The Centre will be implementing the Unified Pension Scheme as an alternative within the National Pension System for Central Government employees already enrolled in the system. 

The Centre introduced the Unified Pension Scheme (UPS) for central government employees last year, combining elements from both the Old Pension Scheme (OPS) and the National Pension System (NPS). Similar to the OPS, the UPS ensures a guaranteed pension for retirees, aiming to offer stability, dignity, and financial security post-retirement. This initiative is designed to support the well-being and provide a secure future for government employees.

As per the government notification issued on January 24, 2025, under the scheme: 

Assured Payout shall be available only in the following cases: 

(a) in case of an employee superannuating after qualifying service of ten years, from the date of superannuation;

(b) in case of the Government retiring an employee under the provisions of FR 56 (j) (which is not a penalty under Central Civil Services (Classification, Control and Appeal) Rules, 1965) from the date of such retirement; and

(c) in case of voluntary retirement after a minimum qualifying service period of 25 years, from the
date such employee would have superannuated, if the service period had continued to
superannuation.

Assured Payout shall not be available in case of removal or dismissal from service or resignation of the employee. In such cases, the Unified Pension Scheme option shall not apply.

Benefits under the Scheme

The Assured Payout under the scheme will be determined based on the following conditions:

• The full assured payout will be calculated at a rate of 50% of the twelve-month average basic pay prior to superannuation. This full assured payout is applicable after a minimum of 25 years of qualifying service.
• If the qualifying service period is less than 25 years, a proportional payout will be given.
• A minimum guaranteed payout of Rs. 10,000 per month is assured if superannuation occurs after ten or more years of qualifying service.
• In cases of voluntary retirement after a minimum of 25 years of qualifying service, the assured payout will begin from the date on which the employee would have superannuated had they continued in service.

Death of payout holder

In case of death of the payout holder after superannuation, family payout @60% of the payout admissible to the payout holder, immediately before his demise, will 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).

Dearness Relief for UPS holders

Dearness Relief will 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 the Dearness Allowance applicable to serving employees. Dearness Relief will be payable only when the payout commences.

A lump sum payment will be allowed on superannuation @10% of monthly emoluments (basic pay + Dearness Allowance) for every completed six months of qualifying service. This lump sum payment will not affect the quantum of the assured payout.

Proposed UPS structure

The Unified Pension Scheme option will consist of two funds:

> An individual corpus funded by employee contributions and matching Central Government contributions.
> A pool corpus supplemented by additional Central Government contributions.

The employees will contribute 10% of their basic pay and Dearness Allowance, while the Central Government will match this contribution. Both contributions will be deposited into each employee's individual corpus.

> The contribution of employees will be 10% of (basic pay + Dearness Allowance). 
> The matching Central Government contribution will also be 10% of (basic pay + Dearness Allowance).

In addition, the Central Government will provide an estimated 8.5% contribution of the basic pay and Dearness Allowance to the pool corpus for all employees who have opted for the Unified Pension Scheme. This additional contribution is intended to support guaranteed payouts under the scheme.