Unified Pension Scheme: What’s New from April 2025?

Starting from April 1, 2025, the government is introducing the Unified Pension Scheme (UPS) under the National Pension System (NPS) for central government employees. This new scheme aims to provide more secure and streamlined pension benefits, along with other changes to improve the pension process for both current and retired employees.

These changes come into effect on April 1, 2025. New recruits will need to adopt the UPS within 30 days of joining, while current employees can choose between the new scheme and the existing one.

What is Unified Pension Scheme (UPS)

The UPS is designed to ensure better financial security for employees after retirement. Key features include:

Employee and Government Contributions: Both the employee and the government will contribute 10% of the employee’s basic pay and Dearness Allowance (DA) into the pension fund. The government will also add 8.5% to a common fund to guarantee benefits.

Minimum Pension: Employees with 25 or more years of service will receive a pension equal to 50% of their last 12 months’ basic pay. Those with 10 to 25 years of service will receive a smaller pension, with a minimum amount of Rs 10,000 per month.

Retirement Benefit: Employees will also receive a lump sum payment of 10% of their basic pay and DA for every six months of service completed, in addition to their regular pension.

Changes to the Employees' Pension Scheme (EPS-95)

The EPS-95 is being updated to help existing pensioners. Key changes include:

Increased Minimum Pension: The minimum pension amount will be raised to ensure better support for pensioners.

Commuted Pension: Pensioners will now get the commuted portion of their pension back in 12 years instead of 15 years.

Digital Pension Process: Pensioners can now submit life certificates online, making the process faster and more convenient.

Support for Senior Citizens and Vulnerable Groups

Additional support is being provided to senior citizens, widows, and disabled individuals, including higher pension amounts ranging from Rs 3,000 to Rs 10,000, depending on their category. Widows will continue to receive their pension even if they remarry.

The introduction of the UPS and other pension reforms will help enhance financial security for government employees and pensioners. It’s important for individuals to understand these changes to make informed decisions about their retirement plans.