The Central Government has introduced multiple options under the Unified Pension Scheme (UPS) for central employees enrolled in the National Pension System (NPS). Unlike NPS, which is market-linked and influenced by stock and debt market performance, UPS ensures a fixed pension amount. Under this scheme, employees are assured of receiving a guaranteed monthly pension of ₹10,000 after retirement, independent of market fluctuations. Throughout this article, we will share all the details on how to check your pension amount under the UPS Scheme.

UPS: A New Pension Scheme Similar to OPS

The Unified Pension Scheme (UPS) is quite similar to the Old Pension Scheme (OPS). Under this scheme, if an employee passes away, their family will receive 60% of the pension as a family pension. At retirement, employees will also receive a lump sum payment along with a gratuity. Those who complete at least 10 years of service in the central government will get a minimum pension of ₹10,000 per month.

Unified Pension Scheme Will Be Implemented Soon

The Unified Pension Scheme (UPS) will come into effect on April 1, 2025. Employees under NPS who choose UPS will not be able to switch back to NPS later. UPS also has a specific formula to calculate pension, allowing employees to estimate their pension amount.

Choose Between NPS or UPS

Employees under NPS must carefully decide before selecting UPS, as they will not have the option to switch back to NPS once they opt for UPS.

Key Benefits of UPS for Employees

  1. 50% of the last drawn salary as a pension
  2. Regular increase in dearness allowance
  3. 60% of the pension given to the family as a family pension
  4. Lump sum payment at retirement
  5. Minimum pension of ₹10,000 per month (after 10 years of service)

Pension Calculation Formula in UPS

  • 50% of Payout × (Sum of 12 Months’ Basic Pay ÷ 12)
  • This formula applies if the employee has 25 or more years of service remaining.
  • If the remaining service is less than 25 years, the payout will be adjusted accordingly.
  • If an employee takes voluntary retirement after 25 years of service, the payout will begin from the original retirement date.

Why the Government Introduced UPS

The government launched UPS to address concerns about NPS among employees. A high-level committee, led by former Finance Secretary and current Cabinet Secretary T.V. Somanathan, designed the scheme. The government has decided to replace the 21-year-old NPS with UPS, which offers benefits similar to OPS.