NEW DELHI, Jan 26: The finance ministry announced the operationalization of the Unified Pension Scheme (UPS) as an option under the National Pension System (NPS) for central government employees, effective from April 1, 2025. The new scheme will provide guaranteed retirement benefits for employees who choose this option under the NPS.

In a statement released on Saturday, the finance ministry clarified that the Unified Pension Scheme would apply to Central Government employees already covered under the National Pension System. It also noted that the Pension Fund Regulatory and Development Authority (PFRDA) may issue regulations to facilitate the scheme’s implementation.

The new UPS offers a monthly pension equal to 50% of an employee’s average basic pay during the 12 months prior to retirement, provided they have completed at least 25 years of service. Employees who have served between 10 and 25 years will receive a pension on a proportionate basis.

The details of the scheme were finalized after discussions held through the joint consultative machinery, which allows Central government staff to resolve issues with the government.

The union cabinet had approved the new pension policy for around 2.3 million central government employees on August 24, 2024. The policy guarantees a pension amount equal to 50% of an employee’s basic pay, addressing longstanding requests from staff unions seeking guaranteed retirement benefits.

In April 2023, the government had established a high-level committee, chaired by the then-finance secretary T.V. Somanathan, to rework the existing pension system, known as the New Pension Scheme (NPS). This was in response to widespread grievances, including political pressures from states led by opposition parties that had reverted to the old pension scheme (OPS), which had placed a financial burden on the government.