The Union Cabinet on Saturday approved a new Unified Pension Scheme (UPS) for Central government employees which would be effective April 1, 2025. The key features of the new pension scheme announced includes an assured pension of 50 per cent, family pension after the death of the employee, and a minimum pension for those who don’t meet the required number of service years in employment.
The Cabinet announcement comes more than a year after the government had announced a formation of a four-member committee under the then Finance Secretary TV Somanathan in April 2023 to review the pension system for government employees.The significant move aims to provide assured pension, family pension and assured minimum pension to the central and state government employees.
Prime Minister Narendra Modi said that the Unified Pension Scheme ensures dignity and financial security for government employees, aligning with the government’s commitment to their well-being and secure future. His remarks came after the Union Cabinet approved an assured 50 per cent of salary as pension for 23 lakh government employees who joined service under the National Pension System (NPS).
“We are proud of the hard work of all government employees who contribute significantly to national progress. The Unified Pension Scheme ensures dignity and financial security for government employees, aligning with our commitment to their well-being and a secure future,” PM Modi posted
Union Minister Ashwini Vaishnaw said that the Centre constituted a committee which held over 100 meetings with several top organisations, including the RBI and World Bank. Based on the recommendation of the committee, the UPS was approved in the Cabinet meeting on Saturday.
Around 23 lakh government employees of the central government would benefit from the UPS, the Minister said, adding that they will have the option to choose between the New Pension Scheme and UPS.
According to the Centre, the central government employees will have the option to decide whether they want to stay in the National Pension Scheme (NPS) or join the Unified Pension Scheme. The state government employees can also go for the new UPS. “If also adopted by State Governments, it can benefit over 90 lakh Government employees who are presently on NPS,” the government said.
UPS will be applicable from April 1, 2025. The cost of the implementation of the scheme will be Rs 6,250 crore in the first year. UPS will apply to all those who have retired under the NPS from 2004.
