Unified Pension scheme to launch on April 1, benefiting 23 lakh government employees

The Central government is set to roll out the Unified Pension Scheme (UPS) on April 1, 2025, aimed at providing enhanced financial security to over 23 lakh government employees. This new scheme is particularly beneficial for those who prefer a stable and predictable post-retirement income over market-linked pension plans.

Under the UPS, Central government employees with at least 25 years of service will receive a fixed pension amounting to 50% of their average basic salary from the last 12 months before retirement. Employees with service tenure between 10 and 25 years will be eligible for a minimum pension of Rs 10,000 per month. In the event of a pensioner’s passing, their family will receive 60% of the last drawn pension as a family pension.

A Hybrid Pension Model

The UPS combines features of both the Old Pension Scheme (OPS) and the National Pension System (NPS). Unlike the NPS, which is market-driven and does not guarantee fixed payouts, the UPS ensures a stable pension amount. The OPS, which was phased out in 2004 in favor of the NPS, provided government-backed pensions with periodic dearness allowance adjustments. The introduction of the UPS aims to address concerns about financial uncertainty under the NPS and provide government employees with a more reliable pension system.

Who Can Opt for the UPS?

The scheme allows current Central government employees enrolled under the NPS to switch to the UPS if they wish. Additionally, it applies to three categories of employees:

Existing Central government employees under the NPS as of April 1, 2025.

New recruits joining Central government services on or after April 1, 2025.

Government employees who were covered under the NPS and have superannuated, voluntarily retired, or retired under Fundamental Rules 56(j) on or before March 31, 2025. In cases where such employees have passed away, their legally wedded spouse can opt for the UPS.

Implementation and Enrolment

The Pension Fund Regulatory and Development Authority (PFRDA) has officially notified the operationalization of the UPS under NPS Regulations 2025. Employees who wish to enroll can access the required forms online from April 1, 2025, through the official website: https://npscra.nsdl.co.in.

This landmark initiative is expected to influence state governments to explore similar pension models, offering greater financial security to employees while balancing fiscal responsibilities. Employees should carefully assess their financial goals and risk preferences before making a decision on whether to opt for the UPS or continue with the NPS.