The UPS, which will take effect from April 1, 2025, offers a minimum pension of ₹10,000 per month with the combination of OPS and NPS. It provides an assured pension to employees almost 50% of their average basic pay with at least 25 service years and family pensions at 60% of the employee’s pension.
Unified Pension Scheme
The Union Cabinet has approved and announced a Unified Pension Scheme yesterday for the government employees of India which will provide them with assured pension retirement. This Scheme’s main purpose is to provide the best elements of OPS and NPS under one benefit.
Unified Pension Scheme is a financial support for government employees to secure their future and provide well-being of life. The key features of this scheme includes Assured pension, Assured minimum pension, Assured family pension, Inflation indexation and Lump Sum payment at superannuation, which we will discuss in detail below.
Who can get a Unified Pension Scheme?
The eligibility criteria for the Unified Pension Scheme is discussed below to check before making decisions about this scheme:
- The UPS is available for central government employees who are currently serving as well as those who have retired under the National Pension System (NPS) since 2004.
- A minimum of 10 years service is required to get only a proportionate Pension and for the full pension amount a minimum of 25 years service is required to get benefits from UPS.
- Those who are currently under the NPS scheme are also eligible to switch to OPS because it allows them to benefit from the most advantageous scheme.
Unified Pension Scheme Key Components & Features
The basic components and key features of the Unified Pension Scheme are discussed in detail below which will be very beneficial for the Indian government employees because it covers the best parts of both OPS and NPS.
Assured Pension:
- Individuals who have completed their 25 years service as a government employee will be able to receive a 50% pension amounting of their average basic pay which will be drawn over the last 12 months before retirement. Individuals who have worked less than 25 years but more than 10 years will be able to receive a proportionate pension based on their working length.
Assured Family Pension:
- Government employees who have just started their pension and got death, then the family and dependents of that employee are eligible to receive 60% of the pension amount which was immediately received by the died employee.
Assured Minimum Pension:
- Individuals can get a minimum pension of ₹10,000 per month if they have less than 10 years service working history. Those who have lower pay sales will benefit from this safety net scheme and fight against inflation through this post retirement.
Inflation Indexation:
- The assured pension, family pension, and minimum pension will be indexed to inflation in future because cost of living changes can also affect the amount of these pensions to maintain the purchasing power and other necessities of retirees.
Lump Sum Payments:
- On the retirement date after six month service, employees will be eligible for lump sum payment at retirement equivalent to 1/10th of their monthly emoluments (pay + DA).
Unified Pension Scheme Implementation Date & Application Process
There is no specific announcement about the application process for the UPS but the implementation of this scheme will take place on 1st April in the next year 2025 and it’s expected that the application process will be announced closer to that date.
If the application process is announced then you can apply for this scheme as per the guidelines by officials or follow the below process.
- After verification of eligibility criteria, individuals must gather all the necessary documents such as your pay scale proof, service years proof, identity proof, and others.
- The completed application, along with the required documents, must be submitted through an online portal or in person at the relevant or designed government office.
- After the submission of the application individuals have to wait and officials will start the verification process to ensure all details are accurate and after successful verification the approved applicants will be eligible for the pension amounts.
- After that, the approved applicants will start receiving their pension from the implementation date which is 1 April 2025 and the pension amount will be directly credited to the qualifying employee’s bank account.
Why is the UPS scheme different from OPS and NPS?
The UPS is a mixture of both OPS and NPS and It is a contributory scheme like NPS but offers a defined benefit like OPS. The contribution limit for UPS is 18.5% but this scheme will provide us a predictable income for post retirement because it offers the full pension amount for the 25 years service.
The minimum pension amount under UPS is ₹10,000 per month; it means that no one will receive below this amount while in the NPS and OPS there is no minimum limit of amount because it depends on the contribution of people. This UPS also provides family assured pensions like OPS while NPS does not provide such benefits.
The amount of UPS will be upgraded as per the cost of living changes to cover the inflation costs. Although there are many similarities in both pension schemes, UPS is the best option to choose because it covers the best parts of them.
