Unified Pension Scheme (UPS) Takes Effect From…: Check Eligibility, Benefits And Withdrawal Details

New Delhi: The central government has introduced the Unified Pension Scheme (UPS) as an alternative to the National Pension Scheme (NPS). It is set to take effect on April 1. This new scheme will offer eligible central government employees, who are currently enrolled in the NPS, an option to switch to the UPS.

UPS Benefits and Eligibility

The Unified Pension Scheme (UPS) was introduced in response to government employees' long-standing demand for the return of the Old Pension Scheme (OPS), which guaranteed retirees 50 per cent of their final salary as pension. Under the UPS, employees will now contribute 10 per cent of their basic salary, including dearness allowance (DA), while the government’s contribution has increased to 18.5 per cent, up from the previous 14 per cent. This change aims to provide better pension benefits for government workers in their retirement.

Pooled Fund and Pension Security

In addition to this, a separate pooled fund will be created with an extra 8.5 per cent contribution from the government. As a result, the UPS will provide participants with a pension equal to 50 per cent of their average basic salary over the last 12 months, ensuring a more secure retirement.

Payouts Under the UPS

Under the UPS, employees are eligible for a lump sum payment equal to one-tenth of their last drawn basic pay and Dearness Allowance for every six months of completed service. This lump sum is separate from the guaranteed pension payout and does not affect it.

Guaranteed Pension and Eligibility Criteria

Additionally, there is a guaranteed pension of 50 per cent of the average basic pay from the last 12 months, available if the subscriber has completed 25 years of qualifying service, contributed regularly, and their individual corpus meets the required benchmark.

Minimum Guaranteed Payout

For those with more than 10 years of qualifying service, the minimum guaranteed payout is Rs 10,000 per month, provided their corpus meets or exceeds the benchmark. If the qualifying service is less than 25 years or if contributions are missing, the payout will be reduced proportionally.

Withdrawals and Benefits for Family

Under the UPS, subscribers can withdraw up to 60 per cent of their individual corpus at the time of retirement, though this will reduce the guaranteed pension payout proportionally. In the event of the subscriber’s death, the spouse will receive 60 per cent of the last paid guaranteed pension for life, along with other vested benefits.

Dearness Relief on Payouts

Additionally, dearness relief will be applied to both eligible payouts and family payouts, calculated in the same way as the Dearness Allowance for serving employees.