Unified Pension Scheme: Who will get 50% pension? What are the provisions for those with less than 10 years of service?

Introduction to Unified Pension Scheme

The Unified Pension Scheme is a pension scheme launched by the Government of India, which will come into effect from April 1, 2025. Under this, all retired central government employees will now be given the benefit of a fixed pension under the Unified Pension Scheme (UPS) instead of the New Pension Scheme (NPS), which will be 50% of their basic salary.

How much amount will be received under the Unified Pension Scheme?

Under the Unified Pension Scheme, all central government employees will be given 50% of their basic salary for the first 12 months before their retirement as pension.

Example: If the basic salary of a government employee before retirement was Rs 45,000, then now under the Unified Pension Scheme, that employee will receive Rs 22,500 as pension; but the condition is that the government employee must have provided a minimum service of at least 25 years.

Can employees with less than 25 years of service not avail UPS benefits?

If a government employee has served for less than 25 years and has served for a minimum of 10 years, in such a case, that government employee will also get a pension of at least Rs 10,000 per month.

Can retired government employees also avail benefits under UPS?

Yes, under the Unified Pension Scheme, such government employees who have currently retired are also eligible to get benefits under this scheme. According to the central government, such central government employees who were receiving benefits under the New Pension Scheme after 2004 are also eligible to get benefits under the Unified Pension Scheme.

The Central Government has announced that the amount which was being given to the Government employees under the New Pension Scheme, will be increased by increasing the amount of this old amount under the Unified Pension Scheme and the eligible amount will be provided under the Unified Pension Scheme.

Example: If a government employee was getting ₹10,000 per month under the New Pension Scheme and if the employee is eligible for ₹15,000 per month under the Unified Pension Scheme, then the additional amount of ₹5,000 will also be received by such government employee.

According to the government, the government has made a provision of Rs 800 crore to provide additional funds to the government employees receiving benefits under the new pension scheme.

Can retired state government employees also avail the benefits of UPS?

No, only central government employees are included under this scheme. It is a different matter that if the state government wants, it can implement the UPS scheme in its state, but at present only central government employees will benefit from this scheme.

If the retired employee dies, how much pension will the family get?

If a government employee dies and he was receiving benefits under the Unified Pension Scheme, then in such a situation the employee’s family will receive 60% of the pension amount.

Example: If a government employee was receiving ₹20,000 per month under the Unified Pension Scheme before his death, then in such a situation after his death his family will receive 60% of Rs 20,000 i.e. Rs 12,000 per month as pension.

Can employees availing NPS benefits avail UPS benefits?

According to the statement of Cabinet Secretary TV Somanathan , the Unified Pension Scheme will come into effect from 1 April 2025. Under this scheme, all those employees who have retired under the New Pension Scheme (NPS) or are going to retire by 31 March 2025 will be eligible to get benefits under UPS.

Unified Pension Scheme Features

1. DA or Dearness Allowance: Dearness Allowance will also be added under the Unified Pension Scheme.

2. Lumpsum amount: All employees will get 6 months’ salary and 10% of DA as lumpsum amount on completion of their 6 months’ salary.

Historical perspective

• Government employees used to get a fixed amount under the Old Pension Scheme, which was abolished in January 2004.
• National Pension System (NPS) was implemented as the new pension scheme from January 2004, regarding which there were continuous complaints from the government employees and it was being repeatedly demanded that this National Pension System should be removed and the old pension scheme should be implemented again in which they used to receive a fixed amount after retirement.
• There was a lot of opposition going on regarding NPS for a long time, which had also become a part of politics. Many opposition parties were making the implementation of the old pension scheme a part of their election issue.
• Considering all this, Prime Minister Narendra Modi constituted a committee headed by the then Finance Secretary TV Somanathan in April 2023. After a detailed discussion, the committee recommended the implementation of UPS (Unified Pension Scheme); which has been accepted by the Central Government.

Difference between UPS and NPS

Difference between Unified Pension Scheme (UPS) and National Pension System (NPS)—

Unified Pension Scheme(UPS)	National Pension System(NPS)
Under UPS, central government employees will receive a fixed amount as pension.	Under NPS, pension is received based on the movement and returns of the stock market, which can vary.
In UPS, employees will deposit 10% of their salary in which the government will give 18.5%.	Under NPS also, employees used to deposit 10% of their salary, in which the government used to give 14%.
After 25 years of regular service in UPS, government employees will receive at least 50% of the last salary as pension .	There was no such fixed pension facility available in NPS.
After serving 10 years in UPS, one will receive a fixed pension of ₹10,000.	This provision was not there in NPS.
UPS is exclusively for central government employees, under which around 23 lakh employees are likely to benefit.	In 2004, only government employees were covered under NPS , but in 2009, the scheme was opened to the private sector as well.
The money received from UPS does not depend on the stock market.	The money received under NPS depended on market fluctuations.
There is a provision of adding dearness allowance in UPS.	There was no such system in NPS.
If a government employee dies, his family is entitled to receive 60% of the employee’s pension.	Under NPS, there is no such permanent arrangement. The family pension is determined based on the total amount accumulated in the pension fund and the annual plan chosen at the time of retirement.
Under UPS, at the time of retirement, the employees will receive a lump sum amount which will be calculated as one-tenth of the total monthly income of the employee, salary as on the date of retirement and dearness allowance etc.	Under NPS, an employee could withdraw only 60% of the total deposit amount at the time of retirement; the remaining 40% was invested and a return was received every month in the form of pension.

Difference between OPS and NPS

Difference between Old Pension Scheme (OPS) and New Pension Scheme (NPS)—

OPS (Old Pension Scheme)	NPS (New Pension System)/New Pension Scheme
There was no deduction from the salary in the old pension scheme.	Under the new pension scheme, 10% of the employee’s salary was deducted.
Under the Old Pension Scheme, if an employee dies while in service, there was a provision for the family to receive pension.	Under the new pension scheme, pension is given in case of death during service but the government does not return the amount deposited under this scheme.
Under the Old Pension Scheme, employees used to get gratuity of Rs 20 lakh at the time of retirement.	There is no permanent provision for this in the new pension scheme.
In the old pension scheme, dearness allowance was applicable after 6 months.	There is no provision for this in the new pension scheme.
In the old pension scheme, when an employee retired, he received 50% of his last basic salary as pension.	The new pension scheme did not guarantee a fixed pension after retirement.
Under the old pension scheme, the amount was given from the government treasury, hence it was a secure pension scheme.	In the new pension scheme, payments were made based on the movement of the stock market.
The facility of GPF i.e. General Provident Fund was available in the old pension scheme.	There was no facility like GPF in the new pension scheme.
In OPS, employees were not required to make any investment from GPF to receive pension at the time of retirement.	To receive pension on retirement in NPS, employees had to invest 40% of their pension fund.

Frequently asked questions related to Unified Pension Scheme

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Unified Pension Scheme (UPS) for central government employees approved: 5 important things to know
Hindustan Times