The Central government has recently notified the Unified Pension Scheme (UPS) for Central government employees, which will come into effect from April 1, 2025. The objective of this scheme is to provide financial security to employees after retirement. This decision brings significant relief to Central government employees, helping them maintain financial stability post-retirement.
This scheme combines the benefits of the Old Pension Scheme (OPS) and the National Pension System (NPS). Under this scheme, employees will receive a fixed pension after retirement, ensuring their financial well-being. It is applicable to employees who are covered under the NPS and have opted for UPS.
Key Benefits of the Unified Pension Scheme
The Unified Pension Scheme offers several key advantages to the Central government employees:
Guaranteed Pension: Under UPS, Central govt employees will receive 50% of their average salary from the last 12 months before retirement. To be eligible for this scheme, an employee must have served for at least 25 years.
Proportional Pension: Employees who have served for more than 10 years but less than 25 years will receive a pension on a proportional basis.
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Minimum Pension: The new pension scheme guarantees a minimum pension of Rs 10,000 per month for employees retiring after at least 10 years of service.
Family Pension: In case of an employee’s demise, 60% of the pension amount will be provided to their family as a family pension.
Financial Security: This scheme ensures that employees remain financially secure after retirement.
Eligibility for the Unified Pension Scheme
To be eligible for the Unified Pension Scheme (UPS), employees must meet the following criteria:
The scheme applies to Central government employees who are covered under the National Pension System (NPS).
Employees must opt for UPS under the NPS framework.
UPS vs. NPS: Key Differences
The primary difference between the Unified Pension Scheme (UPS) and the National Pension System (NPS) is that UPS guarantees a fixed pension after retirement, whereas NPS is based on market-linked returns. UPS, thus, could be a better option for employees who seek a stable income post-retirement.
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