Unified Pension Scheme: A New Era for Central Government Employees

The Pension Fund Regulatory & Development Authority has announced the Unified Pension Scheme (UPS), effective from April 1, 2025, offering a 50% pension of the average basic pay for central government employees. This scheme provides a choice between UPS and the existing National Pension System (NPS).

The Pension Fund Regulatory & Development Authority (PFRDA) has officially notified the operationalization of the Unified Pension Scheme (UPS), which is set to go into effect on April 1, 2025. This scheme assures a pension payout amounting to 50% of a central government employee's average basic pay during the preceding year of retirement.

This significant announcement follows a government notification issued on January 24, 2025, targeting central government employees who fall under the National Pension System (NPS). The UPS provides a dual option for around 23 lakh government employees to choose between it and NPS, established in 2004.

Moreover, UPS distinguishes itself from the old pension scheme by being contributory. Employees are required to contribute 10% of their salary and dearness allowance, with an additional 18.5% contribution coming from the central government. Despite this, the payout hinges on market returns, primarily invested in government debt.

(With inputs from agencies.)