Govt Unveils Unified Pension Scheme: Assured Benefits for Employees

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The Union Finance Ministry has officially notified the implementation of the Unified Pension Scheme (UPS) as an option under the National Pension System (NPS) for central government employees, effective 1 April 2025. The move aims to provide guaranteed retirement benefits to federal employees. Employees who complete a minimum of 25 years of service will receive a pension amounting to 50% of their average basic pay drawn over the last 12 months prior to retirement. For those with service periods between 10 and 25 years, the pension will be proportionately adjusted.In the unfortunate event of an employee’s demise, the scheme ensures a family pension set at 60% of the pension the employee was receiving immediately before their death.Employees retiring after at least 10 years of service are assured a minimum monthly pension of ₹10,000.-The pension will be indexed to the Consumer Price Index for Industrial Workers (CPI-IW), ensuring that the benefits keep pace with inflation.The Pension Fund Regulatory and Development Authority (PFRDA) is expected to issue detailed regulations to facilitate the operationalization of the UPS. Employees currently under the NPS will have the option to choose between continuing with the NPS or switching to the UPS.This development follows the Union Cabinet’s approval of the UPS on August 24, 2024, aiming to address longstanding demands from central government employees for a more secure and predictable pension system.The introduction of the UPS is anticipated to benefit approximately 2.3 million central government employees, offering them enhanced financial security post-retirement.