Centre approves Unified Pension Scheme, providing assured family and minimum pension; here's all you need to know

In a significant move that will guarantee 50 percent of the salary as pension for 23 lakh central government employees, the Union Cabinet, led by PM Narendra Modi, approved the Unified Pension Scheme (UPS) on Saturday.

The scheme will be effective from April 1, 2025. Central government employees will be able to choose between the National Pension Scheme (NPS) and the Unified Pension Scheme (UPS). Moreover, existing central government NPS subscribers will also have the option to switch to the UPS. Meanwhile, state governments will also have the option to adopt the Unified Pension Scheme.

Here's what you need to know:

• Assured Pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years
• Proportionate for lesser service up to a minimum of 10 years of service
• Assured Family Pension @60% of pension of the employee immediately before her/his demise
• Assured Minimum Pension @10000 per month on superannuation after minimum 10 years of service
• Inflation Indexation: On assured pension, on assured family pension and assured minimum pension Dearness relief based on All India Consumer Price Index for Industrial Workers (AICPI-W) as in case of serving employees
• Lump-sum payment at superannuation in addition to gratuity
• 1/10th of monthly emolument (pay + DA) as on the date of superannuation for every completed six months of service
• This payment will not reduce the quantum of assured pension

Also Read: Unified Pension Scheme approved: Key features and benefits

While announcing the details of the scheme, Union Minister Ashwini Vaishnaw said that the Centre constituted a committee that held 100 meetings with several top organizations, including the RBI and the World Bank, to make decisions on this scheme, which will benefit 23 lakh central government employees.

The Minister further said that the government employees will have the option to choose between the New Pension Scheme and UPS.

"PM Modi constituted a committee under the chairmanship of Cabinet Secretary TV Somanathan. This committee held more than 100 meetings with different organisations and nearly all the states. There's a difference between how PM Modi works and the oppositions works," Vaishnaw said.

"Unlike the opposition, PM Modi believes in holding extensive consultations. Following extensions consultations with everyone, including Reserve Bank of India and World Bank, the committee has recommended a Unified Pension Scheme. Today, the Union Cabinet has approved this Unified Pension Scheme, and it will be implemented in the future," he added.

"Today the Union Cabinet has approved Unified Pension Scheme (UPS) for government employees providing for the assured pension...50% assured pension is the first pillar of the scheme...second pillar will be assured family pension...About 23 lakh employees of the central government would benefit from the Unified Pension Scheme (UPS)...There will be an option for the employees to opt between NPS and UPS," Vaishnaw said.