Government Introduces Unified Pension Scheme (UPS) 2025: Guaranteed 50% Pension for Central Employees from April 1

The central government has unveiled the Unified Pension Scheme (UPS) 2025, ensuring 50% of the last drawn salary as pension for its employees. Set to take effect from April 1, 2025, this scheme has been introduced as an alternative to the National Pension System (NPS) following continuous demands for the restoration of the Old Pension Scheme (OPS).

Key Highlights of the Unified Pension Scheme (UPS) 2025

✔ Guaranteed Pension Benefit – Retired employees will receive half of their final salary as pension.
✔ Increased Government Contribution – Employees will contribute 10% of their basic pay and DA, while the government will contribute 18.5% (14% base + an additional 8.5%).
✔ Family Pension Provision – In the unfortunate event of an employee’s demise, 60% of the pension amount will be provided to their family.
✔ Lump Sum & Gratuity Benefits – Upon retirement, employees will receive a lump sum payout along with gratuity.
✔ Minimum Assured Pension – Employees with a minimum of 10 years of service will receive ₹10,000 per month as pension.
✔ Eligibility for Previously Retired Employees – Individuals who retired before UPS 2025 implementation will also benefit, with their pension calculated based on Public Provident Fund (PPF) interest rates, including arrears.

Eligibility and Service-Based Benefits

📌 Employees with 10 to 25 years of service → Will receive prorated pension benefits.
📌 Employees with more than 25 years of service → Eligible for full pension.
📌 Early Retirement Option → Pension disbursal will commence after reaching the designated retirement age.

Reason Behind the Introduction of UPS 2025

The Old Pension Scheme (OPS) provided a 50% salary-based pension, while the New Pension System (NPS) was linked to market performance. To balance stability and sustainability, the government designed UPS, offering a fixed pension guarantee with a contributory framework.

Owing to widespread demands from central employees for the restoration of OPS, the government formulated this hybrid model, ensuring post-retirement financial security.

Implementation Timeline

✔ Announcement Date – January 2025
✔ Effective From – April 1, 2025
✔ First Pension Disbursal – Begins in the new financial year