UPS– The Unified Pension Scheme has come into effect from 1 April 2025, but till now less than 10,000 employees have taken interest in UPS, while there are more than 27 lakh central employees in the country. The deadline to choose this scheme is only till 30 June 2025. After this, the employees who do not choose UPS will remain a part of the National Pension Scheme (NPS) and they will never be able to choose UPS. One of the reasons for the employees not taking interest is that they do not know the benefits of UPS.

What is Unified Pension Scheme

The central government has introduced a new option under the National Pension System (NPS) for central employees, called the Unified Pension Scheme (UPS). This scheme promises pension to those employees who fulfill the prescribed conditions. Dearness relief allowance is an important aspect for the employees joining this scheme, which is very important to understand.

 

 What is DR and why is it important?

 

Dearness Relief (DR) is given to pensioners. Currently, it is revised every six months. This is the financial help that the government gives to its employees and pensioners to protect them from the effects of inflation. It is updated every six months based on the score of the All India Consumer Price Index (AICPI). Its purpose is to ensure that the purchasing power of retired employees does not decline.

 How will DR be implemented under UPS?

According to the rules of UPS, DR will be given to those pensioners only when their pension starts. That is, when a UPS subscriber retires and starts taking pension, only then he will get the benefit of DR. This DR will be available at the rates announced by the Central Government from time to time. For example, if a pensioner gets a pension of Rs 20,000 per month and the rate of DR is 25%, then he will get a total monthly pension of Rs 25,000. Rs 5,000 of DR will be added to this.

 DR also applicable on family pension

If a UPS subscriber dies, the rate of dearness relief will also be applicable on the family pension given to his family, provided he is in a position to receive pension. This means that the family will also get the benefit of dearness relief decided by the government from time to time. Partial withdrawal can be made from UPS for some specific needs. These include higher education, child’s marriage, house construction, treatment or vocational training.