Unified Pension Scheme (UPS) will work as a strong retirement plan for government employees. It will provide facilities like guaranteed pension, financial security to the family, and inflation-fighting, so that retired employees can be assured about their financial future. Let us know what are the terms and conditions regarding this.
UPS: Unified Pension Scheme (UPS) is ready to be implemented from 1 April 2024. The government believes that UPS is a better retirement plan for employees. Regarding this, the Pension Fund Regulatory and Development Authority (PFRDA) had also issued a draft regulation on which suggestions and comments were sought, which have reached PFRDA by 17 February. Now from April, employees will start getting the benefit of UPS. But who will get it, what has to be done for this, how will the benefit be available on retirement in UPS. Let us know all this in detail.
What is Unified Pension Scheme (UPS)?
The government is offering Unified Pension Scheme (UPS) as an option for central employees under the National Pension System (NPS). The objective of this scheme is to ensure that employees covered under NPS can get a fixed pension after retirement. The government will also create a fund for UPS, in which both the employees and the central government will regularly deposit some money. This contribution is invested at a fixed time, so that the employee will get pension every month after retirement.
Who is eligible for UPS?
- Central government employees who are already registered under NPS (National Pension System) can apply for UPS.
- New employees appointed after 1 April 2025 can choose only one of UPS or NPS.
- Employees who retired before 31 March 2025, and those employees whose spouse is receiving pension after their death, can also choose UPS.
- Application for UPS has to be made within a certain deadline. Keep in mind that once UPS is chosen, it cannot be changed.
- What do Central Government employees have to do to get pension under UPS?
- On retirement, if the employee has completed at least 10 years of service.
- If retirement has taken place under FR 56(j) (which is not considered a punishment under Central Civil Services Rules), then UPS will be applicable from the same day.
- On voluntary retirement, if the employee has completed 25 years of service, then the benefit of UPS will be available from the day on which he was to retire normally.
UPS: What will be the contribution of employee and government?
Employee’s contribution – 10% of (Basic Pay + Dearness Allowance)
Government’s contribution – 10% of (Basic Pay + Dearness Allowance)
Apart from this, the government will contribute an additional 8.5% for the employees selected in UPS, so that their fixed pension can be ensured.
How to apply for UPS?
- Existing employees who wish to join UPS will have to fill Form A2.
- New employees recruited after 1 April 2025 can choose UPS by filling Form A1 as soon as they join.
- Employees who retired before 31 March 2025, if they wish to join UPS, will have to fill Form B1.
- Spouse of deceased employees can apply for UPS through Form B2.
Pension and Withdrawal under UPS
Lumpsum Amount:
- For every 6 months of service of the employee, 1/10th of the last Basic Pay + Dearness Allowance will be paid.
- This amount will be separate from the Fixed Pension and will not affect it.
Fixed Pension: The employee will get 50% of the average Basic Pay of the last 12 months, provided:
- He has completed 25 years of service
- Has regularly deposited money in UPS
- His own corpus has reached the UPS standard level
- If the employee has completed 10 years of service and his corpus is equal to the UPS standard, then the minimum pension will be Rs 10,000 per month
- If the service is less than 25 years or there is a reduction in contribution, the pension amount may be less
Withdrawal:
- The employee can withdraw 60% of his own corpus at the time of retirement, but this will reduce the pension amount.
- After the death of the employee, 60% of the fixed pension will be given to the spouse for life.
- Dearness Relief (DR) will be applicable on the pension of UPS pensioners and their families like government employees.
