Pension fund regulator PFRDA has issued a notification of the Unified Pension Scheme (UPS) which will come into effect from April 1, 2025. Under this, NPS employees of the Central Government will get a guaranteed pension of 50% of the average basic salary of the last 12 months. Employees can choose either UPS or NPS. The government will contribute 18.5% while employees will contribute 10%.
New Delhi. The Pension Fund Regulatory and Development Authority (PFRDA) on Thursday issued a notification implementing the Unified Pension Scheme (UPS).
Under the scheme, there is a provision to give 50 percent of the average basic salary received in the 12 months before retirement as a guaranteed pension. This notification follows the UPS notification issued by the government on January 24, 2025 for central government employees covered under the National Pension System (NPS).
UPS rules come into effect from April 1
PFRDA said in a statement that the rules related to UPS will come into force from April 1, 2025. These rules enable the enrollment of central government employees, including employees coming under the existing Central Government NPS in service as on April 1, 2025 and employees recruited in Central Government services on or after April 2025. Enrollment and claim forms for all these categories of central government employees will be available online on the Protein CRA website from April 1, 2025.
Employees also have the option to submit the form physically. According to the notification, the UPS or assured payment option will not be available in case of removal or dismissal of the employee from service or resignation. The notification states that the rate of full assured payment will be 50 per cent of the average basic salary of 12 months immediately before retirement and subject to minimum qualifying service of 25 years.
Option to choose UPS and NPS
The notification will give 23 lakh government employees the option to choose between UPS and NPS. NPS came into effect on January 1, 2004. The Union Cabinet had approved the introduction of UPS on August 24, 2024. Under the Old Pension Scheme (OPS), which was effective before January 2004, employees used to get 50 percent of their last basic salary of their tenure as pension.
Unlike OPS, UPS is of contributory nature. In this, employees will have to contribute 10 percent of their basic salary and dearness allowance, while the employer (central government) will contribute 18.5 percent. However, the final payment depends on the market return on the fund, which is mostly invested in government bonds.
