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  1. Dearness Relief in UPS: Unified Pension Scheme to offer inflation-indexed assured pension

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Dearness Relief in UPS: Unified Pension Scheme to offer inflation-indexed assured pension

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2 min read | Updated on March 13, 2025, 18:06 IST

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SUMMARY

Under Unified Pension Scheme, Dearness Relief will be available on the assured payout and family payout, as the case may be. The Dearness Relief will be worked out in the same manner as Dearness Allowance applicable to serving employees.

Unified Pension Scheme, dearness relief

Unified Pension Scheme will be implemented from April 1, 2025. | Image source: Shutterstock

The Unified Pension Scheme (UPS) for central government employees is set to implemented from April 1, 2025.

The scheme has been introduced under the National Pension System (NPS). It will be available for employees who are covered by the NPS but may want an assured pension on retirement.

According to the Finance Ministry, the assured pension under UPS will be inflation-indexed. It will also offer dearness relief based on the All India Consumer Price Index for Industrial Workers.

"Dearness Relief will be available on the assured payout and family payout, as the case may be. The Dearness Relief will be worked out in the same manner as Dearness Allowance applicable to serving employees. Dearness Relief will be payable only when payout commences," says the official UPS notification dated January 24, 2025.

Top features of UPS

According to a written replies to multiple queries in the parliament by Pankaj Chaudhary, minister of state in the Ministry of Finance, following are some of the top features of UPS:

  • Assured payout at rate of 50% of the average basic pay drawn over the last 12 months before superannuation for a minimum qualifying service of 25 years. This payout will be proportionate for lesser service period up to a minimum of 10 years of service.

  • Assured family payout at the rate of 60% of pension of the employee immediately before his/her demise to surviving spouse.

  • Assured minimum payout of ₹10,000 per month on superannuation after minimum 10 years of service.

  • Inflation indexation on assured payout, on assured family payout, and assured minimum payout. Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of serving employees.

  • Lump sum payment at superannuation in addition to gratuity at a rate of 1/10th of monthly emoluments (pay+DA) as on the date of superannuation for every completed six months of service, this payment will not reduce the quantum of assured payout.

  • Gratuity is payable in terms of Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021.

  • The date for commencement of assured payouts in case of Voluntary Retirement will be from the date such employee would have superannuated, if the service period had continued to superannuation.

UPS will be available as an option under the NPS for central government employees who are currently covered by NPS.

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