Government of India has introduced the Unified Pension Scheme (UPS), a significant step aimed at providing financial stability and security to Central Government (CG) employees post-retirement.
Managed by the Pension Fund Regulatory and Development Authority (PFRDA), the scheme is set to roll out on April 1, 2025.
This initiative combines features of the Old Pension Scheme (OPS) and the National Pension System (NPS), offering a guaranteed pension to eligible employees.
However, the scheme is exclusively available to CG staff, raising questions about its broader applicability.
Eligibility Criteria for Unified Pension Scheme
The UPS is designed to cater to three categories of CG employees:
- Existing Employees: Those in service as of April 1, 2025, and currently covered under the NPS.
- New Recruits: Employees joining CG services on or after April 1, 2025, who must opt for the scheme within 30 days of joining.
- Retired Employees: Those who retired under the NPS on or before March 31, 2025, including those who voluntarily retired or retired under Fundamental Rules 56(j). In cases where a retired employee has passed away, their legally wedded spouse can avail of the scheme’s benefits.
Application Process, Contribution and Benefits
Eligible employees must apply for the UPS within a specified timeframe:
- Existing employees have a three-month window from April 1 to June 30, 2025.
- New recruits must decide within 30 days of joining.
- Retired employees and spouses of deceased retirees can also apply within the stipulated period.
Applications can be submitted online via the CRA portal or offline through the Head of Office or Drawing and Disbursing Officer (DDO) of the respective department.
Once opted for, the decision to join the UPS is irreversible.
Under the UPS, both employees and the government contribute 10% of the employee’s basic pay and dearness allowance (DA) monthly.
Additionally, the government contributes an extra 8.5% to a “Pool Corpus,” which funds the scheme.
The minimum guaranteed payout is ₹10,000 per month, provided the employee has at least 10 years of service.
The scheme offers two fund allocation methods:
- Individual Corpus: Employees can choose between government securities (Scheme G) or lifecycle-based funds (LC-25, LC-50).
- Collective Corpus: Managed according to government regulations, ensuring financial stability for all subscribers.
Unified Pension Scheme For Central Government Employees: What It Means?
The UPS aims to address the financial insecurities faced by CG employees post-retirement.
By guaranteeing a minimum pension, the scheme ensures a stable income, enhancing the quality of life for retirees.
However, its exclusivity to CG staff has sparked debates about its limited scope, leaving state government employees and private-sector workers out of its ambit.
While the UPS is a progressive step, it is not without challenges:
- Limited Applicability: The scheme’s restriction to CG employees under the NPS excludes a significant portion of the workforce.
- Irreversible Decision: Employees must carefully evaluate their options, as opting for the UPS is a one-time, irreversible decision.
- Administrative Hurdles: The dual application process (online and offline) may pose challenges for some employees, particularly retirees and their spouses.
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