The central government has given the green light to the Unified Pension Scheme (UPS) for government employees, marking a significant step under the NDA government’s agenda. The decision was made by the Union Cabinet on Saturday, chaired by Prime Minister Narendra Modi.
Starting from April 1, 2025, the Unified Pension Scheme will be implemented for government employees. Under this new scheme, central government employees will receive a fixed pension equivalent to 50% of their average basic salary over the last 12 months. To qualify for this pension, employees must have completed a minimum of 25 years of service. In the unfortunate event of an employee's death, their family will be entitled to 60% of the pension that the employee would have received. Additionally, a minimum assured pension of ₹10,000 per month will be provided to employees who have served for at least 10 years.
The UPS is designed to benefit central government employees, while the National Pension Scheme (NPS) remains available to both private and government sector workers. Government employees will have the option to choose between the existing NPS and the new Unified Pension Scheme. If state governments also opt to adopt the UPS, approximately 9 million people could benefit. Additionally, current central government employees who are enrolled in the NPS will have the option to switch to the UPS.
Union Minister Ashwini Vaishnaw, during a Cabinet briefing, revealed that implementing the UPS will require an initial expenditure of around ₹800 crores to cover arrears. The government's expenditure is expected to increase by approximately ₹6,250 crores in the first year of the scheme’s implementation. Vaishnaw also noted that the final draft of this pension scheme was the result of over 100 meetings with the Reserve Bank of India and the World Bank. He highlighted that PM Modi had appointed an expert committee, led by Finance Secretary T.V. Somanathan, to design the scheme.
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