What is Unified Pension Scheme (UPS): Eligibility, Benefits & Returns?
The Central Government introduced the Unified Pension Scheme, also known as UPS, on 24 August 2024. UPS will be implemented from 1 April 2025 onward and is likely to cover 23 lakh Central Government employees. Find all about the newly introduced UPS scheme, its details, and benefits.
What is the Unified Pension Scheme?
The Central Government announced the Unified Pension Scheme (UPS) for government employees. It thus seeks to provide stability, dignity, and financial security for government employees post-retirement, making sure that their post-retirement lives are well taken care of and their future is secure.
Presently, government employees come under the National Pension System. Employees will have a choice to continue in the NPS or opt for the UPS scheme. However, once the employee decides on UPS, then he/she shall stick to that and cannot go back or reverse it.
State governments can also accept and implement the UPS scheme for state employees. Maharashtra is going to be the first state to implement UPS. The Maharashtra cabinet approved implementing UPS in place of the current NPS for state employees on 25 August 2024. If all states implement UPS, then more than 90 lakh government employees who currently come under the NPS across India will benefit.
Unified Pension Scheme Details
You can also check the table given below to learn more important details related to the Unified Pension Scheme.
| Scheme Name | Unified Pension Scheme (UPS) |
| Announced on | 24 August 2024 |
| Implementation Date | 1 April 2025 |
| Beneficiaries | Central Government employees |
| Employee Contribution | 10% of basic salary + dearness allowance |
| Employer Contribution | 18.5% of basic salary + dearness allowance |
| Benefits |
|
UPS Scheme Eligibility
- A fixed amount of pension is payable to government employees who have completed a minimum service of 10 years.
- Government employees who have put in at least 25 years of service are entitled to a percentage of their average basic pay as a pension.
- Government employees are covered under the National Pension System and voluntary retirement Scheme opted by NPS.
UPS Scheme Minimum Pension Amount
The Unified Pension Scheme guarantees a minimum pension of Rs. 10,000 per month for government employees who retire after completing at least 10 years of service.
UPS Scheme Benefits
- Assured pension: Retired staff members are entitled to a pension of 50% of their average basic pay over the past 12 months before retirement. This facility is extended to employees who have completed at least 25 years of service. Proportionate pension benefits are extended to staff members who have served for shorter periods ranging from 10 years to 25 years.
- Contribution by Government: The government shall contribute 18.5% of the pay of the employee towards the pension fund. The employees shall contribute 10% of their pay towards the pension fund.
- Assured family pension: In case of the pensioner’s death, 60% of the pension immediately before the retiree’s demise will be given to her/his spouse.
- Assured minimum pension: An employee who has completed at least 10 years of service will be entitled to get Rs. 10,000 per month on superannuation.
- Inflation indexation: Inflation indexation will be granted on assured pension, assured minimum pension and assured family pension. The Dearness Relief (DR) will be accorded considering the All India Consumer Price Index for Industrial Workers (AICPI-IW) as like Service employees.
- Lump-sum payment: In the superannuation stage, the retirees shall receive a single-stage lump sum amount along with the gratuity. The amount shall be one-tenth of one month’s emoluments /pay plus DA as shown in the superannuation date for every six months completed service. It shall be given without any reduction in the assured pension amount.
UPS Scheme Returns
The Unified Pension Scheme gives an assured pension amount to government employees in retirement. The contribution of 18.5% of the basic pay plus DA by the employer and 10% of the Basic Pay plus DA by the employee will be made every month.
A pension equal to 50 per cent of the average basic pay drawn in the last 12 months before retirement, is given to the employees for those who have retired after a minimum service of 25 years. For employees who have put in a minimum of 10 years of service at retirement, Rs 10,000 per month is provided as a pension after retirement.
Unified Pension Scheme vs NPS
The below table provides the differences between the Unified Pension Scheme and NPS:
| Particulars | UPS | NPS |
| Employers contribution | Employers will contribute 18.5% of the basic salary to the pension fund. | Employers will contribute 14% of the basic salary to the pension fund. |
| Pension amount | 50% of the average basic pay over the last 12 months before retirement for employees with 25 years of service. | NPS does not provide a guaranteed fixed pension amount. It depends on the returns on investments and the total accumulated corpus. |
| Family pension | In the case of the retiree’s death, 60% of the pension received immediately before the retiree’s demise will be provided to his/her family. | The family pension provided under the NPS depends on the accumulated corpus and the chosen annuity plan. |
| Minimum pension amount | Rs. 10,000 per month for employees retiring with at least 10 years of service. | The pension amount depends on the investments made in the market-linked investment schemes. |
| Lump sum amount | A lump sum amount is provided to employees upon superannuation, calculated as 1/10th of their last drawn monthly pay for every six months of completed service. | Employees can withdraw up to 60% of the NPS corpus as a lump sum upon superannuation. |
| Inflation protection | The UPS provides inflation protection, with pensions adjusted based on the AICPI-IW. | There is no provision in NPS for automatic DA increments for inflation protection. |
Unified Pension Scheme inherits features from OPS and NPS. UPS has assured pensions, minimum pensions, and family pensions, thus giving a sense of security to retired employees. It also extends protection against inflation by adjusting the DR of employees.
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