centre-notifies-unified-pension-scheme-for-govt-employees

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 from 1 April. This scheme will provide guaranteed retirement benefits.  

 

"The Unified Pension Scheme shall apply to such central government employees who are covered under the National Pension System and who opt for this scheme under the NPS," the Finance Ministry stated in its notification.  

 

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

 

The new scheme, known as the Unified Pension Scheme (UPS), guarantees 50 per cent of the average basic pay received by a central government employee over the 12 months preceding retirement, provided they have completed 25 years of service.

 

Employees with service of less than 25 years but more than 10 years will receive a pension on a proportionate basis.

 

The framework for the scheme was devised following consultations held under the Joint Consultative Machinery, a platform enabling central government employees to address disputes with the government.  

 

The Union Cabinet, led by Prime Minister Narendra Modi, approved the new pension policy on 24 August 2024. The policy, benefiting approximately 2.3 million central government employees, guarantees 50 per cent of basic pay as a monthly pension.

 

This decision followed requests from central government staff unions advocating for guaranteed retirement benefits.  

 

A high-level committee, chaired by Cabinet Secretary-designate T.V. Somanathan, who was then serving as Finance Secretary, was constituted in April 2023 to redesign the current pension system, known as the New Pension Scheme (NPS). The reform was necessitated by widespread dissatisfaction, which had become a contentious political issue.

 

In response, some states governed by opposition parties reverted to the Old Pension Scheme (OPS), despite its financial burden on government resources.  

 

Some opposition-ruled states reverted to the older pension scheme (OPS), despite its financial burden on government resources, to appeal to voters in states such as Himachal Pradesh.