From April 1, at least 25 years of service in the Central government will entitle employees to a fixed pension under the new Unified Pension Scheme (UPS).
This pension will be equivalent to 50% of the average basic pay of the last 12 months preceding retirement, providing greater financial security after retirement.
The plan is to give a stable and certain income to more than 23 lakh workers, with a special focus on those who would want a fixed pension over a market-linked pension.
The employee, who has served for more than 10 years but less than 25 years, will get a minimum pension of Rs 10,000 per month. In case of death, the family will be eligible to get 60% of the last pension received as a family pension.
Government employees working in the central government and already operating under the National Pension System (NPS) will be eligible to migrate to the UPS.
The UPS is structured as a hybrid system, incorporating elements of both the Old Pension Scheme (OPS) and the NPS. In contrast to the NPS, which relies on market-linked returns and has no guaranteed payout, the UPS provides a guaranteed pension amount.
The OPS, which was substituted by the NPS in 2004, provided completely government-guaranteed pensions with periodic dearness allowance revisions.
The launch of the UPS is in line with increasing demands from government workers on the uncertainty of the NPS. Most of the workers have complained of a desire for a more stable pension plan to guarantee solvency in their post-retirement life. The new plan is supposed to balance offering employees guarantees and upholding fiscal prudence by the government.
This action can give impetus to other state governments to implement similar pension schemes. Staff members with more than 25 years of service will gain the most from the 50% guaranteed pension scheme, while others will have to balance their financial objectives and risk appetite.
Those interested in a secure, predictable income post-retirement can find the UPS more favorable, whereas workers who are alright with market risks may continue to favor the NPS for the potential of greater returns.
PFRDA issued formal notice regarding the operationalisation of the UPS under NPS Regulations 2025 last week. These regulations permit the enrolment of three groups of Central government employees:
1. Employees in service as on April 1, 2025, who are covered by the NPS.
2. New recruits joining the Central Government on or after April 1, 2025.
3. Employees who were covered by the NPS and have retired or have voluntarily retired on or before March 31, 2025, and their legally married spouse in case of the deceased subscriber.
Forms for enrollment and claims for all these categories will be submitted online from April 1, 2025, on the official website: [https://npscra.nsdl.co.in](https://npscra.nsdl.co.in).
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