New Unified Pension Scheme to co-exist with National Pension Scheme

Responding to the demand to reinstate the Old Pension Scheme (OPS) before assembly polls, the Union Cabinet announced on August 24th a refined Union Pension Scheme (UPS) that will co-exist with the National Pension Scheme (NPS). This means all NPS-enrolled government employees will be able to switch to UPS from the financial year 2025.

Employees must serve at least 25 years in central or state government to be eligible for the pension under UPS. The monthly disbursement under UPS will begin at the age of 60, calculated as 50% of the average monthly salary earned in the twelve months leading to retirement. For service tenure between 10 and 25 years, eligible employees will receive a minimum monthly pension of ₹10,000.

Employees retiring before March 31, 2025, choosing UPS will receive arrears. The pension will be adjusted for inflation. Private employees cannot use UPS, but their employers can opt for NPS.