The central government has announced the Unified Pension Scheme (UPS) as a new option for central government employees under the National Pension System (NPS).
Unlike NPS, where pension amounts depend on market performance, UPS guarantees a fixed pension after retirement. The scheme ensures a minimum monthly pension of Rs 10,000.
Implementation Date
UPS will be implemented from April 1, 2025. Employees who switch from NPS to UPS cannot revert to NPS later. Only central government employees currently enrolled in NPS are eligible for this scheme.
Pension Calculation Formula
The pension under UPS will be calculated using the following formula:
Pension = 50% × (Total of basic salary of last 12 months / 12)
Employees with 25 years or more of service will receive full pension.
Employees with less than 25 years of service will get a proportionally reduced pension.
Pension Calculation Examples
Example 1: Full Pension (25+ Years of Service)
If an employee’s average basic salary is Rs 1,00,000, the pension will be: 50% × 1,00,000 = Rs 50,000 per month
Example 2: Reduced Pension (Less than 25 Years of Service)
If an employee has served for 20 years and their average basic salary is Rs 1,00,000, then: 50% × 1,00,000 × (20/25) = Rs 40,000 per month
Example 3: Minimum Guaranteed Pension
If an employee’s basic salary is Rs 15,000, the calculated pension would be Rs 7,500. However, since the minimum pension guarantee is Rs 10,000, they will receive Rs 10,000 per month.
Benefits of UPS
UPS provides central government employees with a stable and guaranteed pension, making it a beneficial choice for those who want to avoid market-related risks.
It ensures financial security post-retirement, particularly for employees seeking predictable income without exposure to investment fluctuations.
