UPS 2025 Notification Released – Learn About Pension Calculation, Features, and Eligibility Criteria

The Ministry of Finance released the Unified Pension Scheme 2025 Notification on January 24, 2025. This notification details the pension calculation methodology, key features of the scheme, and eligibility requirements. The scheme is designed to streamline and standardize pension benefits across various sectors, providing enhanced financial security for individuals after retirement.

Key Highlights of the Unified Pension Scheme

The newly introduced Unified Pension Scheme (UPS) will apply to Central Government employees currently covered under NPS, offering them the choice to switch to a more structured pension plan with assured payouts. Below are the essential details of the scheme:

Eligibility Criteria

The scheme applies to central government employees under NPS who choose to opt for it. Assured payouts will be available under the following conditions:

• Superannuation: Employees completing a minimum of 10 years of qualifying service will receive benefits from the date of superannuation.
• Retirement under FR 56(j): If the government retires an employee under the provisions of FR 56(j), payouts will commence from the date of such retirement.
• Voluntary Retirement: Employees who take voluntary retirement after 25 years of service will receive payouts starting from their original superannuation date.

Exclusions: Employees removed, dismissed, or who resign from service will not be eligible for assured payouts under the scheme.

Benefits Under the Unified Pension Scheme

1. Assured Payouts:
   • Employees completing 25 years of service will receive 50% of their last 12 months’ average basic pay as an assured payout.
   • Employees with less than 25 years of service will receive payouts proportionate to their service period.
   • A minimum guaranteed payout of ₹10,000 per month is assured for employees with at least 10 years of qualifying service.
2. Family Benefits:
   • In case of an employee’s demise after superannuation, 60% of the assured payout will be provided to the legally wedded spouse.
3. Dearness Relief (DR):
   • The assured payout and family payout will be eligible for Dearness Relief, calculated similarly to serving employees’ Dearness Allowance.
4. Lump Sum Payment:
   • Upon superannuation, employees will receive a lump sum amount equivalent to 10% of their monthly emoluments (Basic Pay + DA) for every completed six months of qualifying service.

Structure of the Unified Pension Scheme

Under this scheme, the pension corpus will consist of two distinct components:

1. Individual Corpus:
   • Contributions from both the employee and the central government at 10% of the basic pay + DA each, credited into the employee’s account.
2. Pool Corpus:
   • An additional 8.5% contribution by the government to ensure assured payouts under the scheme.

Investment Choices and Management

• Employees will have the flexibility to choose investment options for their individual corpus, regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
• If no choice is made, the default investment pattern will be applied.
• The Central Government will manage the pool corpus, ensuring stability and regular payouts.

Operational Guidelines

• Employees opting for the UPS will have their existing NPS corpus transferred to the new scheme.
• The value of the corpus will be reviewed periodically, and employees will be informed about their corpus performance.
• Employees opting for UPS cannot switch back to NPS once the choice is made.
• The scheme will apply to future central government employees as well.

Implications for Retired Employees

• Those who have already retired but wish to opt for the Unified Pension Scheme can do so.
• A top-up amount will be calculated and adjusted based on prior withdrawals and annuities received.
• They will also receive arrears with interest as per the Public Provident Fund (PPF) rates.

Disciplinary Proceedings and UPS Eligibility

Employees facing disciplinary action at the time of superannuation or post-retirement will have separate provisions regarding assured payouts, which will be notified separately.

Effective Date

The Unified Pension Scheme will come into effect from April 1, 2025, offering eligible employees a structured and secure post-retirement financial framework.

View the original Notification: