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The Indian government has approved the 'Union Pension Scheme' (UPS) for its employees, promising 50% of their final year's average salary as pension after 25 years of service.
The UPS also guarantees a minimum monthly pension of ₹10,000 after 10 years of service and increases the government's pension fund contribution from 14% to 18%.
The scheme, which applies to retirees since 2004, offers an alternative to the National Pension Scheme and could benefit up to 90 lakh employees if adopted by state governments.

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Indian government introduces Union Pension Scheme

Centre approves 'Union Pension Scheme' for government employees

By Chanshimla Varah

Aug 24, 2024

08:28 pm

What's the story

The central government has approved the Union Pension Scheme (UPS), a new initiative set to benefit approximately 23 lakh central government employees. The UPS, which has been approved by the Union Cabinet under Prime Minister Narendra Modi's leadership, promises to provide assured pension, family pension, and a guaranteed minimum pension to government workers. The scheme will be implemented from April 1, 2025.

Scheme details

Key features of the Union Pension Scheme

The scheme guarantees 50% of the average basic salary for the last 12 months before retirement as pension for government employees who complete a minimum of 25 years in service. In case of death, the pensioner's family will receive 60% of the pension received at their time of death. The scheme also assures a minimum pension of ₹10,000 per month after retirement for government employees after a minimum 10 years of service.

Contribution hike

UPS to increase government's contribution to pension fund

Under the current pension scheme, employees contribute 10% while the central government contributes 14%. With the introduction of UPS, this contribution from the central government will be increased to 18%. Union minister Ashwini Vaishnaw said that the UPS was approved after extensive consultations with various organizations and nearly all states under the chairmanship of Cabinet Secretary TV Somanathan.

Implementation date

Who can join UPS 

Central government employees will have the option to choose between the National Pension Scheme (NPS) and UPS. Existing central government NPS subscribers will also be given the option to switch to UPS. If state governments choose to adopt the UPS, then the number of beneficiaries could potentially reach around 90 lakh. The government estimates that the expenditure for arrears will be ₹800 crore. The annual cost increase is projected to be approximately ₹6,250 crore in the first year.

Potential beneficiaries

Scheme will also apply to all those who have retired 

During a media briefing on Saturday, Somanathan also said, "This will also apply to all those who have already retired under the NPS from 2004 onwards." "Everybody who has retired under NPS from the time of its inception and also including those retiring till March 31, 2025, will also be eligible for all these five benefits of the UPS. They will get arrears of the past after adjusting whatever they have withdrawn."