UPS: Know how much pension a central govt employee will get with less than 25 years of service – Formula explained!

Unified Pension Scheme: The Finance Ministry issued a notification on January 24 explaining features and details regarding implementing the Unified Pension Scheme (UPS) from April 1, 2025. UPS will be available as an option for employees covered under the National Pension System (NPS).

Ever since the notification came out, central government employees have been trying to fully comprehend some of the provisions under the scheme. The provisions like assured pension start timeline and minimum number of service years for voluntary retirement under UPS will need more clarity. Employees are hoping that the Pension Fund Regulatory and Development Authority (PFRDA) will come out with clearer guidelines before the UPS gets implemented in the next financial year.

Employee unions still seeking OPS restoration

Employee union leaders are still not satisfied with the government’s decision to offer employees the choice between NPS and UPS. They are adamant about their demand for bringing back the OPS.

Employees are of the view that instead of complicating matters with NPS and UPS, the government should directly restore OPS benefits.

What’s in the UPS notification?

Employees see this notification as complex and confusing, saying it is difficult for the average employee to comprehend.

Also read: Unified Pension Scheme: Central govt employees opting for voluntary retirement? Assured pension will get delayed – Check new rules

How much pension will central government employees receive?

Let’s understand from this example: if an employee’s average basic salary for the first 12 months of retirement is Rs 50,000, and the employee has worked for 25 years with a monthly contribution of 10%, the monthly pension would be Rs 25,000 + DR. If the employee has worked for 15 years, the pension would be Rs 15,000 + DR, calculated at a 30% rate. For employees with only 10 years of service, the prescribed minimum pension amount under the UPS scheme would be Rs 10,000 + DR.

The calculation shows that the pension amount will be double the years of service. For example, an employee with a basic salary of Rs 40,000 and 20 years of service would receive a 40% pension, which equals Rs 16,000 + DR.

Loss on taking VRS

If an employee takes a Voluntary Retirement Scheme (VRS) before completing 25 years of service, they will not receive pension benefits from the date of VRS.

 » Read More

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