UNIFIED PENSION SCHEME(UPS)
WHAT IS UNIFIED PENSION SCHEME?
The Central Government announced the Unified Pension Scheme (UPS) for government employees. It aims to provide stability, dignity and financial security for government employees post-retirement, ensuring their well-being and a secure future.
Currently, government employees are covered under the National Pension System (NPS). These employees have the option to continue with NPS or switch to the UPS scheme. However, once employees choose UPS, the decision is final and cannot be reversed.
The state governments can also adopt and implement the UPS scheme for state government employees. Maharashtra is the first state to implement UPS. The Maharashtra cabinet decided to implement the UPS scheme for state government employees on 25 August 2024.
UPS SCHEME ELIGIBILITY:
- Government employees who have completed at least 10 years of service are eligible for a fixed pension amount.
- Government employees who have completed at least 25 years of service are eligible to receive a percentage of their average basic pay as a pension.
- Government employees who are covered under the National Pension System (NPS) and those opting for Voluntary Retirement Scheme (VRS) under NPS.
UPS SCHEME BENEFITS:
- Retirement Pension
Monthly Pension: A regular monthly payment after retirement, calculated based on the employee’s salary and the number of years of service.
Full Pension Age: Employees generally receive a full pension upon reaching a specific retirement age, which may vary but is usually around 60-65 years.
- Early Retirement Options
Some schemes allow employees to retire early with reduced pension benefits if they meet certain conditions, such as completing a minimum number of service years.
- Survivor Benefits
If the pensioner passes away, their spouse or dependent may receive a portion of the pension (often called a survivor’s pension).
Lump Sum Death Benefit: A one-time lump sum payment to the family in case the pensioner dies before retirement or shortly after.
- Disability Pension
In the case of disability due to an illness or accident, the employee may be eligible for a pension before reaching the retirement age.
- Lump Sum Withdrawal
Employees may opt for a partial withdrawal or a lump sum payment upon retirement instead of or in addition to regular pension payments.
- Gratuity and Commutations
Gratuity: A one-time payment based on the length of service and final salary.
Commuted Pension: Some schemes offer the option to commute a portion of the pension into a lump sum, reducing the regular monthly pension amount.
- Portability
A unified scheme often allows portability, meaning employees who move between different sectors or organizations can carry their pension benefits with them.
- Indexed Pension
Pensions may be indexed to inflation or cost of living, ensuring that the benefits retain their value over time.
- Tax Benefits
Contributions to the pension scheme, as well as the pension income, may come with tax incentives, depending on local laws.
UPS Scheme Minimum Pension Amount:
The UPS 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 Returns:
The UPS scheme provides an assured pension amount to government employees upon their retirement. Employers will contribute 18.5% of the basic salary + dearness allowance, while employees will contribute 10% of the basic salary + dearness allowance every month.
For employees who have retired after a minimum service of 25 years, 50% of their average basic pay drawn in the previous 12 months prior to retirement will be provided as a pension. For employees who have retired after a minimum service of 10 years, Rs. 10,000 per month is provided as a pension after retirement.
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 |
