Centre finally notifies Unified Pension scheme option for government staff covered by NPS

Unified Pension Scheme for Central Government employees under NPS offers lifelong benefits, including minimum pension and family pension provisions.

The Unified Pension Scheme shall be applicable to such Central Government employees who are already covered under NPS and who “choose” the UPS option, the notification said, indicating workers will have to actively enroll into the UPS.

“The existing Central Government Employees under National Pension System, on the effective date of operationalisation of the Unified Pension Scheme option, as well as the future employees of Central Government can choose to either take the Unified Pension Scheme option under the National Pension System or continue with the National Pension System without the Unified Pension Scheme option,” it said.

For those exercising the UPS option, their retirement corpus will comprise of two funds. First, an individual corpus with employee contribution and matching Central Government contribution made through their working lives, and second, will be a pool corpus with additional Central Government contribution.

The official order detailing the scheme stressed that “for the sake of clarity”, it is made clear that any employee who exercises the UPS option under the NPS, shall not be entitled for and cannot claim, any other policy concession, policy change, financial benefit, any parity with subsequent retirees etc. later, including post-retirement.

The UPS, announced in late August, was formulated as a step to address concerns of government employees about the NPS, by a high-level panel led by former Finance Secretary and the present Cabinet Secretary TV Somanathan.

The government had announced that employees covered under the NPS who have already retired would also be covered by the UPS. The formal notification states that the Pension Fund Regulatory and Development Authority (PFRDA) will determine the mechanism for making available the top-up amounts for such retirees who opt for the UPS, relative to the payouts they receive under the NPS.

In August 2024, the NDA government reversed a 21-year-old measure to reform India’s civil services pension system boldly brought in by the Atal Behari Vajpayee government. Instead, it unveiled what it called a new ‘Unified Pension Scheme’ (UPS) that is virtually akin to the Old Pension Scheme (OPS), and assures government employees of 50% of their last drawn pay as a lifelong monthly benefit.