Centre Notifies Unified Pension Scheme for Central Government Employees
The Union Finance Ministry has officially notified the operationalisation of the Unified Pension Scheme (UPS) for Central government employees under the National Pension System (NPS), set to take effect from April 1, 2025. This move will provide guaranteed retirement benefits for eligible employees.
New Delhi: The Union Finance Ministry has officially notified the operationalization of the Unified Pension Scheme (UPS) for Central government employees under the National Pension System (NPS), set to take effect from April 1, 2025. This move will provide guaranteed retirement benefits for eligible employees.
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What is the Unified Pension Scheme?
The Unified Pension Scheme (UPS) will be available to Central government employees already covered under the NPS, with an option to select it under the system. The new scheme aims to provide a pension equal to 50% of an employee’s average basic pay over the last 12 months before retirement, contingent on completing at least 25 years of service.
Employees with service between 10 and 25 years will receive a proportionate pension.
Implementation and Regulations
The Pension Fund Regulatory and Development Authority (PFRDA) is expected to issue regulations to facilitate the operationalisation of the UPS. The effective date for the scheme’s implementation is set for April 1, 2025.
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Background and Government Approval
The UPS was introduced following extensive discussions between the Central government and employee unions. The Union Cabinet, led by Prime Minister Narendra Modi, approved the new pension framework on August 24, 2024, in response to requests for guaranteed retirement benefits.
Committee and NPS Reform
A high-level committee, headed by T.V. Somanathan (the then-finance secretary), was formed in April 2023 to revise the existing National Pension System (NPS). The review was prompted by grievances over the NPS, which had led several opposition-led states to reinstate the previous Old Pension Scheme (OPS) due to financial strain. The issue became a hot topic in states like Himachal Pradesh during elections.
A Step Towards Guaranteed Retirement Benefits
This pension reform is designed to provide Central government employees with reliable, long-term financial security post-retirement. The new policy is part of the government’s broader commitment to addressing workers’ concerns and ensuring their financial well-being in their later years.
