Unified Pension Scheme Changes From August 1: 3 New Rules Bring Big Benefits

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The Unified Pension Scheme (UPS), which will come into force on August 1, 2025, envisions a revolutionary pension framework for central government employees, combining the old pension scheme’s (OPS) security with the National Pension System’s (NPS) flexibility. The Union Cabinet approved it on August 24, 2024. UPS brings financial security to 23 lakhs of federal employees, which can swell to 90 lakhs in case states adopt it. The article highlights the salient features, eligibility, benefits, and procedures of application.

UPS: Key Features 

UPS guarantees 50% pension of average basic pay during the last 12 months, paid to persons with more than 25 years of service, while those with 10–24 years are paid proportionate amounts. There is a minimum pension of ₹10,000 per month for persons with at least 10 years of service. Family pension constitutes 60% of the employee’s pension in the event of the death of the employee, and there is Dearness Relief (DR), which takes care of inflation in the country. A lump- sum payable as one-tenth of monthly emoluments for every six months of service, in addition to gratuity, will enhance retirement benefits.

Eligibility criteria

Eligible groups include:

  • Present Employees: Central government employees under NPS as of April 1, 2025.  
  • New Recruits: Those joining after April 1, 2025.  
  • Retirees: Employees retired by March 31, 2025, or their spouses, if eligible.Employees must contribute 10% of basic pay plus DA, with the government contributing 18.5%. Exclusions apply to those dismissed or resigned voluntarily. The choice to switch from NPS to UPS is final, with a deadline of September 30, 2025, for existing NPS members.

Over NPS Benefits

Unlike the market-linked NPS, UPS offers a fixed pension, thus providing an elimination of the risk factor:

  • 50% of average basic pay for 25 years of service.
  • Family Pension: Surviving spouses receive 60% of that pension.
  • Inflation protection: DR adjustments on the basis of AICPI.
  • Lump sum payment: Additional grant without a reduction in pension sums.UPS covers gratuity, with benefits for partial withdrawals from gratuity for higher education, medical emergencies, and house purchases.

The Application Process

Enrollment:

  • Go to the Protean CRA website (npscra.nsdl.co.in).
  • Click on “Unified Pension Scheme” and choose “Migrate from NPS to UPS” (“Form A1 for NPS members”) or “Register for UPS” (“Form A2 for new recruits”).
  • Submit the details to Drawing and Disbursing Officer (DDO) by June 30, 2025, for existing employees.Retirees or spouses shall file using Forms B1-B6 based on retirement or marital status. Employees shall also file Form 2 for updates to family details so that records remain accurate.

Impact and Future Prospects

UPS overcomes drawbacks of NPS by guaranteeing a pension to the employees and their families. Its being taken up by Maharashtra for its state employees hints at much larger possibilities; up to 90 lakh could gain if other states come on board. Having to contribute a good amount to the government (18.5%) also means that the funds will not lapse into being unsustainable in due course of time; the scheme clearly shows that fiscal discipline can go hand in hand with employee welfare.

Also Read: 4% DA Hike Confirmed for Central Govt Employees: Latest Update Here

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