On Saturday, August 24, 2024, the NDA-led central government introduces the “Unified Pension Scheme” (UPS), a new initiative designed to reform pension benefits. The scheme aims to mirror the objectives of the old pension scheme, which was discontinued by the NDA for government employees appointed on or after January 1, 2004. Since that change, these employees have been covered under the National Pension System (NPS).
| 12 Months Basic Pay Grand Total | 8,56,800 | |
| UPS Basic Pension calculate on the amount | 71,400 | |
| Basic Pension per month | 35,700 | |
Remember, amendments were made to the Central Civil Services (Pension) Rules, 1972 and the Central Civil Services (Commutation of Pension) Rules on December 30, 2003 to facilitate this change. The NPS, a contribution-based pension scheme, was officially introduced for central government employees through a notification by the Ministry of Finance on December 22, 2003, and became mandatory for all new recruits to central government services (except the armed forces) from January 1, 2004.
The Unified Pension Scheme (UPS), which can be seen as an upgraded version of the existing National Pension System (NPS), was announced on Saturday, August 24, 2024. Under this new scheme, government employees will continue to contribute 10% of their Basic + D.A., while the government’s contribution has been increased from 14% to 18.5%.
The upcoming new pension scheme UPS (Unified Pension Scheme):
The Central government has made a significant shift from the NPS-like system by introducing the Unified Pension Scheme (UPS), which can be described as an upgraded version of NPS. Effective from April 1, 2025, this new scheme ensures that approximately 23 lakh central government employees will receive 50% of the average basic pay drawn over their last 12 months before retirement, provided they have completed at least 25 years of service. Unlike the old pension scheme, this calculation is not based on the last basic pay drawn.
The UPS (Unified Pension Scheme) may be provides its subscribers or contributors with five key benefits:
- Assured Pension: Subscribers receive a pension amounting to 50% of their average basic pay over the last 12 months before retirement.
- Family Pension: In the event of the subscriber’s demise, a family member will receive a pension equal to 60% of the pension the subscriber was receiving.
- Minimum Pension Package: Employees who have completed at least 10 years of service are guaranteed a minimum pension of ₹10,000 per month.
- Inflation Indexation (AICPI-IW): Pensions are regularly updated to match inflation and changes in the cost of living, ensuring that they maintain their value and purchasing power over time.
- Gratuity: Upon retirement, employees are entitled to a lump-sum gratuity payment. This is calculated as 1/10 of their monthly emoluments (Basic Pay + DA) as of the superannuation date for every six months of completed service.
| Sr.no. | Month-Year | Basic Pay |
|---|---|---|
| 1 | March-2024 | 68,600 |
| 2 | April-2024 | 68,600 |
| 3 | May-2024 | 68,600 |
| 4 | June-2024 | 68,600 |
| 5 | July-2024 | 72,800 |
| 6 | August-2024 | 72,800 |
| 7 | September-2024 | 72,800 |
| 8 | October-2024 | 72,800 |
| 9 | November-2024 | 72,800 |
| 10 | December-2024 | 72,800 |
| 11 | January-2025 | 72,800 |
| 12 | February-2025 | 72,800 |
According to the table, the basic pension for retired employees, calculated at 50% of the average salary over the last 12 months of ₹71,400, is ₹35,700. Medical benefits are not included in this monthly pension amount. If the medical provision continues, an additional ₹1,000 will be added to the total, bringing the amount to ₹53,550.
| 12 Months Basic Pay Grand Total | 8,56,800 |
| Average of Basic Pay of 12 months | 71,400 |
| UPS, Basic Pension @50% | 35,700 |
| DA @50% | 17,850 |
| Medical benefits are not included in this monthly pension amount. If the medical provision continues, an additional ₹1,000 will be added | |
| Total Pension per month | 53,550 |
It seems that the election which gave this government the power has had very bad results for it and due to this pressure or think about the future results, the government has taken the step of implementing the “Unified Pension Scheme” (UPS).
Notification Update: January 25, 2025
In accordance with the officially released Gazette Notification on the Unified Pension Scheme (UPS), the scheme’s provisions have been detailed, including the proportion of lump sum payment upon retirement, applicable tax benefits, and any future amendments.
As per the notification, employees under UPS shall continue contributing 10% of their salary to the scheme’s fund. The scheme differs from the Old Pension Scheme (OPS) in its structure and benefits, ensuring a defined pension framework with assured payouts. Further clarifications and guidelines will be issued as necessary.
