Unified Pension Scheme (UPS Scheme 2024) vs NPS – Key Features and Differences Explained

The Union Cabinet has approved the Unified Pension Scheme (UPS Scheme), a landmark reform in India’s pension system for government employees, set to replace the New Pension Scheme (NPS) from April 1, 2025. The UPS Scheme addresses concerns about the NPS, which, despite being a contributory pension scheme, lacked guaranteed pension benefits, leaving many employees uncertain about their post-retirement financial security.

The UPS Scheme introduces several key features aimed at providing a more predictable and secure retirement income:

1. Assured Pension : Under the UPS Scheme, retirees will receive a guaranteed pension amounting to 50% of their average basic pay drawn during the last 12 months of service, applicable to those with at least 25 years of service. Employees with 10 to 25 years of service will receive a pension proportionate to their length of service.

2. Assured Family Pension : The UPS scheme includes a provision for family pensions, ensuring that in the event of an employee’s death, their family will receive 60% of the pension the employee was receiving.

3. Assured Minimum Pension: To protect lower-paid employees, the Scheme guarantees a minimum pension of ₹10,000 per month, provided the employee has completed at least 10 years of service.

4. Inflation Indexation : The UPS Scheme includes a mechanism for inflation indexation, adjusting the assured pension, family pension, and minimum pension in line with inflation rates to preserve their real value.

5. Gratuity Benefits : The Scheme also provides a lump-sum gratuity payment upon retirement, calculated as 1/10th of monthly emoluments for every completed six months of service, without affecting the pension amount.

The UPS Scheme will be available to all central government employees, with those currently under the NPS having the option to switch. Retirees under the NPS since 2004 will also be eligible for UPS benefits, receiving arrears after adjusting previously withdrawn amounts. This reform is expected to enhance the financial security of government employees post-retirement, making the UPS Scheme a cornerstone of India’s public sector pension system.

https://pib.gov.in/PressReleasePage.aspx?PRID=2048607

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