Unified Pension Scheme (UPS) –  Best Retirement Plans For Government Employees

It will be implemented on 1 April 2025.

Summary

The Unified Pension Scheme (UPS) aims to provide financial security and dignity for public servants who retire from service. The Central Government announced the UPS on August 24, 2024, as a scheme that will start on April 1, 2025, to benefit the initial 23 lakh Central Government employees, while expansion depends on state government participation.

About the Unified Pension Scheme

Through the Unified Pension Scheme (UPS), government employees receive a pension solution that combines elements from both the Old Pension Scheme (OPS) and the National Pension System (NPS). All workers under NPS have the option to move to UPS with their rights to change set in stone.

UPS implementation operates under state government jurisdiction and Maharashtra shows leadership in its adoption. The adoption of UPS across India could deliver pension benefits to the 90 lakh workers in government service.

Important Details of Unified Pension Scheme

Scheme Name	Unified Pension Scheme (UPS)
Announced on	24 August 2024
Implementation Date	1 April 2025
Employee Contribution	10% of basic salary + dearness allowance (DA)
Employer Contribution	18.5% of basic salary + DA

UPS Scheme Eligibility criteria

Category	Details
Service Requirement	– Minimum 10 years of service for a fixed pension.
	– Minimum 25 years of service for a percentage-based pension.
Coverage	– Employees under the NPS.
	– Individuals who choose Voluntary Retirement Scheme (VRS) through the NPS program.
UPS Scheme Minimum Pension Amount	Staff members who retire after spending at least 10 years in employment will receive ₹10,000 per month.

Major benefits of UPS scheme

Assured Pension:

• 50% of the average basic pay over the last 12 months before retirement for employees with 25+ years of service.
• Proportionate pension for those with 10–25 years of service.

Government Contribution:

• The employer makes payments amounting to 18.5% of both basic salary and DA.
• Each employee must contribute 10% of their basic salary level along with the paid DA payments.

Assured Family Pension:

Surviving spouses get 60% of the pension benefits after the deceased retiree’s death.

Inflation Protection:

All India Consumer Price Index for Industrial Workers (AICPI-IW) sets the rate through which pensions maintain their value during periods of inflation.

Lump Sum Payment:

Retirees receive a gratuity equal to 1/10th of their final monthly salary for each completed period of service lasting six months.

UPS Scheme Returns

Guaranteed returns through the UPS contradict variable market-driven returns available with the NPS. 

Key highlights:

• Employer Contribution: 18.5% of basic salary + DA.
• Employee Contribution: 10% of basic salary + DA.

Pension Amount:

₹10,000/month for employees with 10+ years of service.

50% of average basic pay for employees with 25+ years of service.

Unified Pension Scheme vs NPS

Particulars	UPS	NPS
Employer Contribution	18.5% of basic salary + DA.	14% of basic salary + DA.
Pension Amount	Guaranteed. 50% of last 12 months’ average pay.	Market-linked; depends on investment returns.
Family Pension	60% of the retiree’s last pension.	Depends on the chosen annuity plan.
Minimum Pension	₹10,000/month for 10+ years of service.	No guaranteed minimum.
Inflation Protection	Adjusted based on AICPI-IW.	No automatic DA adjustments.
Lump Sum	Fixed gratuity based on service period.	Up to 60% corpus withdrawal allowed.

Secure your retirement with the Unified Pension Scheme (UPS)!