National Pension System: Centre Notifies Unified Pension Scheme For Govt Staff; Effective From THIS Date...

Unified Pension Scheme Notification 2025: The Union Finance Ministry has announced the implementation of the Unified Pension Scheme (UPS) as an option under the National Pension System (NPS) for Central Government employees, effective April 1. The initiative aims to ensure financial security and stability for employees after retirement.

This new scheme integrates features of both the Old Pension Scheme (OPS) and the National Pension System (NPS), offering a guaranteed pension to provide financial stability and dignity in retirement. The Unified Pension Scheme is applicable to Central Government employees already enrolled in the NPS and will be available to those who have completed at least 10 years of qualifying service.

“The Unified Pension Scheme shall be applicable to such Central Government employees who are covered under National Pension System and who choose this option under National Pension System,” the Finance Ministry’s notification states.

“Pension Fund Regulatory and Development Authority (PFRDA) may issue regulations for operationalising UPS. The effective date for operationalisation of the Unified Pension Scheme shall be 1st April 2025,” it added.

Basic Salary Under Unified Pension Scheme 

The new system, the Unified Pension Scheme or UPS, will offer 50 per cent of the average basic pay drawn by a Central government employee over the 12 months before retirement provided he or she completes 25 years of service. Employees who have put in less than 25 years of service but more than 10 years, will get pension on a proportionate basis.

The contours of the scheme were drawn up following discussions held under the joint consultative machinery, a platform that provides a mechanism to Central government staff to resolve differences with the government.

The Union cabinet led by Prime Minister Narendra Modi on August 24, 2024, approved the new pension policy for nearly 2.3 million Central government employees, unveiling a framework that assured 50 per cent of basic pay as monthly payout, on the request of Central government staff unions who had sought guaranteed retirement benefits.

The government had set up a high-level committee headed by cabinet secretary-designate T.V. Somanathan, the then-finance secretary, in April 2023 to rework the current pension system, known as the new pension scheme or NPS. 

The move followed widespread grievances that had snowballed into a political hot potato, with some states, in which opposition parties were in power, switching to the previous old pension scheme (OPS) which had proved to be a strain on the financial resources of the government. However, since it was a populist step aimed at catching votes the political parties had made it a poll issue in states such as Himachal Pradesh. (With IANS Inputs)