Good news for central government employees who retired from their jobs just before the Unified Pension Scheme (UPS) got implemented on April 1 this year! The central government has offered a chance to employees who retired on or before March 31, 2025, to come under the UPS.
Barring armed forces, almost all central government employees are covered under the National Pension System (NPS), which was launched in 2004, replacing the Old Pension Scheme (OPS). Since then, there have been demands from various labour unions and employee representative bodies in the country to roll back the NPS scheme and restore the OPS. Several states reintroduced the OPS under pressure from employee unions.
The Centre, however, maintained that the OPS won’t be brought back, and instead, the Modi government last year announced a new pension plan – UPS – combining some of the elements from both the existing NPS plan and the OPS. But the move did not satisfy most of the government employees, and they kept demanding the OPS restoration. The UPS has so far not been able to attract the kind of response the government would have wanted. Out of around 23 lakh government employees under the NPS, not even 50,000 have opted for the new pension plan.
Amidst this, the Centre has given the UPS option to those who retired on or before March 31 this year.
The National Pension System (NPS) Trust on May 26 in a public notice announced that UPS benefits will also be available for subscribers who have retired under NPS on or before March 31, 2025. This is valid for self or their legally wedded spouse, it said.
Notably, the last date or deadline to join UPS is June 30, 2025.
“The Pension Fund Regulatory and Development Authority (PFRDA) is conducting regular webinar on UPS via website,” the notice said.
NPS: What does the public notice say?
“Unified Pension Scheme (UPS) introduced by central government, effective from 1 April 2025, are available to past retirees also (those subscribers who retired on or before 31/03/2025 and had completed a minimum 10 years of qualifying service in Central Govt.) and for their legally wedded spouse,” the notice said.
What are special features of UPS?
The UPS has been introduced as an option under the NPS for the central government employees covered under NPS so that they may receive an assured payout after their retirement. It is a ‘fund-based’ payout system which relies on the regular and timely accumulation and investment of applicable contributions (from both the employee and the employer) for grant of monthly payout to the retiree.
Also read: NPS pension funds Vs Large-cap mutual funds: Which gave better returns in 5 years?
How is the assured payout calculated under UPS?
The rate of full assured payout will be @50% of 12 monthly average basic pay, immediately prior to superannuation. Full assured payout is payable after a minimum 25 years of qualifying service. In case of lesser qualifying service period, proportionate payout would be admissible. A minimum guaranteed payout of Rs 10,000 per month shall be assured in case superannuation is after 10 years or more of qualifying service subject to timely and regular credit of contributions and no withdrawals. In cases of voluntary retirement after a minimum 25 years of qualifying service, assured payout will commence from the date on which the employee would have superannuated if he had continued in service.
What is the rate of contribution of employee and Central Government under UPS?
The contribution of employees will be 10% of (basic pay + Dearness Allowance). The matching Central Government contribution will also be 10% of (basic pay + Dearness Allowance). Both will be credited to each employee’s individual corpus. Further, Central Government shall provide an additional contribution of an estimated 8.5% of (basic pay + Dearness Allowance) of all employees who have chosen the UPS option, to the pool corpus on an aggregate basis. The additional contribution is for supporting assured payouts under the UPS option.