Ahead of the Union Budget, the Ministry of Finance has notified the Unified Pension Scheme (UPS) “as an option” under the National Pension System (NPS) for central government employees.
Effective from April 1, 2025, this scheme aims to provide assured payouts, a structured retirement benefit and added flexibility for employees.
Here’s a breakdown of the key features and implications of the scheme.
Who is eligible for the Unified Pension Scheme?
The scheme applies to central government employees covered under the NPS who opt for the UPS. However, the assured payout under the scheme will only be available in specific scenarios:
a. Superannuation with 10+ years of service
b. Retirement under FR 56(j) without penalty
c. Voluntary retirement after completing 25 years of service, with payout beginning from the notional superannuation date
It must be noted that assured payouts are not applicable in cases of resignation, dismissal, or removal from service.
Also read: Budget 2025: Will central govt revamp Unified Pension Scheme amid rising OPS demand? UPS Vs OPS difference explained!
Key benefits of the Unified Pension Scheme (UPS)
The Unified Pension Scheme (UPS) provides structured retirement benefits for employees who choose to opt into the scheme.
Employees with 25 or more years of service will receive 50% of their last 12 months’ average basic pay as assured payouts. For those with less than 25 years of service, proportionate payouts will be provided. Additionally, employees with a minimum of 10 years of service will be assured a monthly payout of at least Rs 10,000.
In case of the payout holder’s demise after superannuation, the legally wedded spouse will receive 60% of the assured payout as a family benefit.
Dearness Relief (DR):
Dearness Relief will be provided on both assured payouts and family payouts. The calculation method for DR will align with the DR applicable to serving employees.
Lump Sum Benefit:
Upon retirement, employees will receive a one-time lump sum payment equivalent to 10% of their basic pay plus Dearness Allowance (DA) for every completed six months of service.
These comprehensive benefits aim to provide financial security and support for employees and their families post-retirement.
Also read: Will DA calculation formula be changed for central govt employees?
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