Are you a central government employee looking forward to the Unified Pension Scheme (UPS)? This new plan will start on April 1, 2025, and will change how you retire. The Union Cabinet has approved it, and it will help 2.3 million central government employees. If state governments also join, it could help 90 million people.

Key Takeaways

• The UPS Pension Scheme 2024 will provide a guaranteed pension of 50% of the average basic pay of the last 12 months before retirement, with at least 25 years of service.
• Families of deceased employees will receive 60% of the pension as family pension.
• A minimum pension of ₹10,000 per month is assured for employees with at least 10 years of service.
• Employees contribute 10% of their basic salary and DA, while the government contributes 18.5% under the UPS.
• Pensions under UPS will be indexed to inflation using the All India Consumer Price Index for Industrial Workers (AICPI-IW).

Introduction to UPS Pension Scheme 2024

What is the UPS Pension Scheme 2024?

The Unified Pension Scheme (UPS) is a new pension plan for central government workers in India. It will replace the 21-year-old National Pension System (NPS). The NPS was brought in to replace the Old Pension Scheme (OPS).

UPS Pension Scheme 2024 Implementation Date

The UPS Pension Scheme 2024 got the green light from the Indian Cabinet on August 24, 2024. It will start on April 1, 2025. It will cover about 2.3 million central government employees. If state governments join in, around 90 million people could benefit.

The UPS has some key features:

• Guaranteed minimum pension of ₹10,000 a month for 10 years of service
• Pension based on 50% of the last 12 months’ average basic pay before retirement
• Family pension at 60% of the employee’s pension if they pass away
• Inflation adjustment using the All India Consumer Price Index for Industrial Workers (AICPI-IW)
• Extra lump sum payments at retirement, along with gratuity

The UPS aims to give government employees more financial security and better benefits. It also aims to spread the pension cost more fairly between the government and employees.

UPS pension scheme retirement 2024 Key features

The Unified Pension Scheme (UPS) was introduced by the Indian government in 2024. It has many key features to help retirees and their families. Let’s look at some of the main points of this new pension plan:

Assured Pension Calculation

Employees with at least 25 years of service get a pension that’s 50% of their last year’s pay before retirement. If they’ve worked less, their pension is adjusted but not less than 10 years of service is needed for UPS pension benefits.

Family Pension Provision

If an employee passes away, their family gets 60% of the pension as a family pension. This ensures the retiree’s dependents have financial support after the employee’s death.

The UPS also ensures a monthly pension of at least ₹10,000 for those with 10 years of service. This gives eligible retirees a basic financial safety net.

Other benefits include dearness relief based on the All India Consumer Price Index (AICPI-IW). There’s also a one-time lump-sum payment equal to one-tenth of the monthly salary plus dearness allowance for every six months worked. This won’t change the guaranteed pension amount.

“The Unified Pension Scheme (UPS) aims to provide a comprehensive retirement solution for employees, offering assured pension calculations, family protection, and enhanced financial security.”

Eligibility and Contributions

The UPS pension scheme offers a solid retirement plan for central government workers in India. To join, you must meet certain requirements. You need at least 10 years of service to qualify for a pension. Also, you must work for 25 years to get the full pension benefits.

This scheme is optional for those already in the National Pension System (NPS) or taking Voluntary Retirement under NPS. But, for new employees, choosing the UPS is a permanent decision.

UPS Pension Scheme Eligibility Criteria

• Employees with at least 10 years of service are eligible for a pension under the UPS pension scheme.
• To get the full benefits, you must work for at least 25 years.
• The UPS scheme is optional for current employees under the National Pension System (NPS) and those taking Voluntary Retirement under NPS.
• Future employees can also choose to join UPS pension scheme, but once opted in, the decision is irreversible.

Employee and Government Contribution Rates

The UPS pension scheme has a simple contribution formula:

• Employees Contribution: 10% of your basic salary and Dearness Allowance (DA).
• Government Contribution: 18.5% of your salary.

By introducing the UPS pension scheme, the government wants to give a secure, inflation-adjusted retirement plan to over 23 lakh central government employees. This plan aims to ensure their financial security in retirement.

Differences from National Pension System (NPS)

The Unified Pension Scheme (UPS) was introduced by the government in 2025. It differs from the National Pension System (NPS) in several ways. While both aim to provide retirement benefits, UPS offers a more comprehensive and assured pension structure than NPS.

One key difference is the pension calculation method. Under UPS, employees get a pension of 50% of their average pay from the last 12 months before retiring. This ensures a stable income. NPS pension varies based on the market and the annuity plan chosen.

Another difference is in family pension provision. UPS ensures 60% of the employee’s pension goes to their family if they pass away. This gives dependents more financial security. NPS family pension depends on the corpus and annuity plan chosen.

UPS also has a higher government contribution of 18.5% of basic pay, compared to NPS’s 14%. It also includes inflation indexation for pensions. This means retirees’ buying power stays the same over time, unlike with NPS.

Overall, UPS provides a more secure retirement plan for government employees. It meets their specific needs. NPS, on the other hand, is for a wider audience, including the private sector, with a market-linked approach.