Unified Pension Scheme: What will be the minimum pension of a central govt employee under UPS after 8th Pay Commission?

With the Centre announcing the formation of the 8th Pay Commission, the focus of central government employees has shifted to the Unified Pension Scheme (UPS). Government employees will see significant changes in their pensions under the National Pension System (NPS) and the UPS once the recommendations of the new pay panel are implemented next year.

The Modi government has approved the 8th Pay Commission, bringing significant relief to over 1.2 crore central government employees and pensioners. These employees and pensioners were keenly awaiting a comprehensive revision of their salaries and pensions.

Ahead of the Union Budget 2025, the move has brought cheer to millions of families with members either employed in central government service or retired after serving.

After the Cabinet approved of the new pay commission, Union Minister Ashwini Vaishnaw assured that the commission’s recommendations would be implemented seamlessly before the 7th Pay Commission’s term ends in 2026.

Also read: 8th Pay Commission: Top 5 developments every central govt employee must know – What PM Modi said

What is UPS, and when will it be implemented?

The Unified Pension Scheme (UPS) is designed to combine the key features of both the Old Pension Scheme and the New Pension Scheme, offering government employees a comprehensive retirement cushion.

The scheme, expected to be implemented on April 1, 2025, will include provisions such as a family pension, a guaranteed pension amount, and a minimum pension for all central government employees.

Under this pension scheme, employees will be entitled to a guaranteed pension amount equivalent to 50% of the average basic pay for the 12 months preceding their retirement, provided they have served the central government for at least 25 years. Also, the minimum pension under this scheme will be Rs 10,000 per month for employees, provided the employee completes at least 10 years of service upon superannuation.

In the event of the pensioner’s death, 60% of the pension amount received at the time of demise will be provided to the family.

What will be the minimum pension for central govt employees under UPS after the 8th Pay Commission?

Let’s take a look at how the minimum pension under the UPS might change once the 8th Pay Commission is implemented.

Experts are of the view that a fitment factor could range from 1.92 to 2.86, which could result in pensions increasing from the current Rs 9,000 to anywhere between Rs 17,280 and Rs 25,740.

The fitment factor is a key multiplier used to calculate salaries and pensions for government employees.

If a fitment factor of 2.86 is implemented, pensions and salaries could see an increase of approximately 186%.

What will be the minimum salary for serving employees under UPS?

If this fitment factor of 2.86 is applied, the minimum basic salary of a government employee would rise to Rs 51,480, up from the current minimum salary of Rs 18,000. Likewise, pensions would increase to Rs 25,740, compared to the current pension of Rs 9,000, if the fitment factor is set at 2.86.

However, this pension amount is contingent on the assumption that the fitment factor will indeed be set at 2.86. If the fitment factor changes, it would result in a corresponding change in both the minimum salary and pension for central government employees once the 8th Pay Commission is implemented.