Centre Notifies Unified Pension Scheme For Government Employee

The Union Finance Ministry has notified the operationalization of the Unified Pension Scheme (UPS) under the National Pension System (NPS) for Central government employees. This change will take effect from April 1, 2025, and will ensure guaranteed retirement benefits.

Details Of Unified Pension Scheme (UPS)

The UPS will apply to Central government employees under NPS who opt for the new scheme. The Pension Fund Regulatory and Development Authority (PFRDA) will issue regulations for the UPS’s operation.

Under this scheme, employees who complete 25 years of service will receive 50% of their average basic pay for the 12 months before retirement. Those with less than 25 years but more than 10 years of service will get a proportionate pension.

Background And Approval Of The New Scheme

The new UPS framework followed discussions under the joint consultative machinery, which resolves issues between government staff and authorities. On August 24, 2024, the Union Cabinet, led by Prime Minister Narendra Modi, approved the new pension policy for about 2.3 million employees. It promises 50% of basic pay as a monthly pension, responding to demands from government staff unions.

The government formed a high-level committee in April 2023, led by T.V. Somanathan, to reform the pension system. This step addressed the dissatisfaction with the current New Pension Scheme (NPS), especially after some states adopted the old pension scheme (OPS). Although the shift to OPS was seen as a populist move, it increased the financial strain on the government.

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