Unified Pension Scheme Introduced for Central Government Employees

In a significant development ahead of assembly elections in one state and a Union Territory, the Indian government has announced the Unified Pension Scheme (UPS), addressing ongoing discontent with the New Pension Scheme (NPS).

Union Minister Ashwini Vaishnaw revealed that the new scheme, set to benefit approximately 23 lakh central government employees, will be implemented from April 1, 2025. The UPS, approved by Prime Minister Narendra Modi’s cabinet, allows employees the option to choose between continuing with the NPS or switching to the new scheme.

Key features of the UPS include an assured pension of 50% of the average basic salary over the last 12 months for employees with a minimum of 25 years of service, a guaranteed family pension at 60% of the pensioner’s last drawn salary, and a minimum pension of ₹10,000 per month for retirees with at least 10 years of service.

The government’s contribution under UPS will increase to 18.5%, up from the current 14%. The introduction of UPS follows recommendations from a government committee led by Finance Secretary T.V. Somanathan, formed in response to calls from several non-BJP-ruled states to revert to the Old Pension Scheme (OPS).