The Pension Fund Regulatory and Development Authority (PFRDA) has issued a significant notification about the launch of the Unified Pension Scheme (UPS). This new scheme will take effect from April 1, 2025. It provides Central Government employees covered under the National Pension System (NPS) with a guaranteed pension of 50% of their average basic salary from the last 12 months of service. Key Features Of The Unified Pension Scheme Under the UPS, employees can choose between the new scheme or continue with the existing NPS. The government will contribute 18.5% […]
Central Government Employees: A New Pension Era Begins With Unified Pension Scheme
The Pension Fund Regulatory and Development Authority (PFRDA) has issued a significant notification about the launch of the Unified Pension Scheme (UPS). This new scheme will take effect from April 1, 2025. It provides Central Government employees covered under the National Pension System (NPS) with a guaranteed pension of 50% of their average basic salary from the last 12 months of service.
Under the UPS, employees can choose between the new scheme or continue with the existing NPS. The government will contribute 18.5% of the salary, while employees will contribute 10%. This move aims to provide a more secure retirement for employees by offering a fixed pension amount.
The guaranteed pension under UPS will be based on the average basic salary of the last 12 months before retirement. However, employees must complete a minimum of 25 years of qualifying service to be eligible for this pension.
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Starting April 1, 2025, Central Government employees will have the option to enroll in UPS. This applies to both current employees covered under NPS as of the date and those recruited after April 2025. Employees can fill out their enrollment and claim forms online through the Protein CRA website, or they can submit the forms physically.
A key provision of the notification is that 23 lakh government employees will have the option to select between UPS and NPS. NPS has been in effect since January 1, 2004. UPS is a new option introduced by the Union Cabinet, approved on August 24, 2024.
While the Old Pension Scheme (OPS) offered employees 50% of their last basic salary, UPS is contributory in nature. This means that both employees and the government will contribute to the pension fund. However, unlike OPS, the final payout under UPS is subject to market returns, primarily invested in government bonds.
For employees to qualify for the full guaranteed pension under UPS, they must have at least 25 years of service. If an employee is terminated, removed from service, or resigns before retirement, they will not be eligible for the assured pay option.
The new Unified Pension Scheme offers Central Government employees a significant option for their retirement planning. It ensures a guaranteed pension based on the average salary, with contributions from both employees and the government. Employees will have the flexibility to choose between the UPS and the NPS, giving them more control over their retirement funds. The scheme promises a stable future for government employees as they plan their post-retirement life.
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