India’s Union Cabinet has approved the Unified Pension Scheme on August 24, 2024. The plan is designed to give surety returns to pensioners working in the central government. This plan replaced the National Pension System for any govt employee opting for more security and predictability.

Hence, the Government of India has designed the optional pension scheme known as Unified Pension Scheme (UPS), introduced alongside National Pension System (NPS) in 2024 for Central government employees to provide comprehensive and centralized pension. The consolidation of the various existing pension schemes under a single scheme is made to ensure equitable and efficient retirement benefits.

More comprehensive pension schemes, which have been long-pending demands from the Central Government employees, remain unimplemented. Repeatedly raising the issue several times in his election speeches for the reintroduction of the Old Pension Scheme (OPS) has been something that several opposition parties and their leaders have done.

Key Features are:

Guaranteed Pension: The Unified Pension Scheme to government employees will be 50% of the average basic salary of 12 months preceding retirement. This is subject to a minimum of 25 years of service. Proportionate benefits will accrue for government employees who have served for at least 10 years.

Family Pension: In case the pensioner dies, the family will receive 60% of the pension that was being paid.

Minimum Pension: The pension shall be at least? 10,000 per month for an employee with a service period of more than 10 years.

Inflation Protection: All Unified Pension Scheme amounts, including the family and minimum pensions, will be indexed to inflation through Dearness Relief based on AICPI-IW.

Lump Sum: Retiree will be given a lump sum equal to 1/10 of his monthly salary of pay and Dearness Allowance for every six months service rendered. That payment will not be taken into account as a part of the pension; however, it shall be provided as his old age pension.

This scheme is scheduled to begin on April 1, 2025. Employees can choose to remain in the NPS or opt out for the UPS (Unified Pension Scheme).