Unified Pension Scheme (UPS) from April 1: Conditions for 50% pension to central govt employees explained

The Unified Pension Scheme (UPS) for central government employees will be implemented from April 1, 2025. The new pension scheme has been launched to address the long-standing demand of central government employees to provide an assured pension that existed before the National Pension System (NPS).

UPS has been introduced under NPS but with a twist. NPS doesn't offer assured pension. However, returns from NPS are expected to be higher in the long run as a certain part of investments in this scheme can be deployed to generate wealth from equity markets.

In contrast, UPS will offer up to 50% of the last 12 months’ average basic pay as assured pension to central government employees. However, the assured pension to an employee will be available only if s/he retires under one of the following:

UPS: Eligibility conditions

1. The assured pension will be available if an employee retires after a qualifying service of 10 years,

2. Or, when the central government retires an employee under Fundamental Rules (FR) 56 provisions.

The FR 56 provides retirement guidelines for central government employees.

3. The assured pension will also be allowed on voluntary retirement after a minimum qualifying service period of 25 years.

In case of voluntary retirement after 25 years, assured pension will be provided from the date when the employee would have superannuated if the service period had continued till retirement.

UPS: 50% assured pension conditions

The UPS has been designed in a way to ensure that central government employees opting for the scheme can get 50% of their last 12 months’ average basic pay as an assured pension on retirement. However, not every employee will be eligible for this option.

According to the official notification of UPS dated January 24, 2025, the assured pension payout under UPS will be as follows:

The rate of full assured payout will be 50% of 12 monthly average basic pay, immediately before superannuation.

However, the full assured payout i.e. 50% of last 12 months' average basic pay would be paid only to an employee who has completed minimum 25 years of qualifying service.

What if an employee has less than 25 years of qualifying service? In this case, proportionate payout would be allowed.

However, the unified pension scheme will guarantee a minimum payout of ₹10,000 per month in case of superannuation after 10 years or more of qualifying service.