Planning for retirement is a crucial part of financial well-being. The Government of India has introduced a game-changing initiative called the Unified Pension Scheme (UPS), effective from April 1, 2025, to streamline retirement benefits for Central Government employees. If you’re a government worker or planning to join the public sector, this guide will break down everything you need to know — in simple, clear language.
What is the Unified Pension Scheme (UPS)?
The Unified Pension Scheme (UPS) is a pension option available to Central Government employees, launched as part of the broader National Pension System (NPS) framework. It simplifies the pension process by offering structured benefits under one umbrella. Once you opt for UPS, the switch is permanent.
It aims to provide post-retirement income security through assured monthly payouts, lump-sum benefits, inflation adjustments, and family support in case of the pensioner’s death.
Quick Overview: Key Highlights of UPS
| Parameter | Details |
|---|---|
| Scheme Name | Unified Pension Scheme (UPS) |
| Launch Date | August 24, 2024 |
| Notification Date | January 24, 2025 |
| Implementation Date | April 1, 2025 |
| Eligible Participants | Central Government Employees |
| Employee Contribution | 10% of Basic Salary + Dearness Allowance (DA) |
| Employer Contribution | 8.5% of Basic Salary + DA |
| Pension Payout | 50% of average basic pay (last 12 months)* |
| Minimum Guaranteed Pension | ₹10,000/month (after 10+ years of service) |
Full amount applicable only after 25+ years of service.
Who Can Join UPS?
UPS is available to a broad range of individuals connected with Central Government services:
- Current Employees (under NPS): Still working as of April 1, 2025, and enrolled in NPS.
- New Entrants: Joining the government service on or after April 1, 2025.
- Retired Government Employees: Retired under NPS before March 31, 2025.
- Spouses of Deceased Employees: Legally wedded spouses of deceased NPS-covered employees.
How to Enrol in UPS?
The enrolment process depends on your employment status:
- Existing Employees: Submit Form A2 to your Drawing & Disbursing Officer (DDO) by June 30, 2025.
- New Joiners (Post-April 2025): Submit Form A1 within 3 months of joining.
- Retirees Before March 31, 2025: Submit Form B2 along with KYC documents.
- Spouses of Deceased Subscribers: Use Form B6 to claim benefits.
You can apply either online via the Protean eGov portal or submit forms physically to your office’s DDO. Once enrolled, the decision cannot be reversed.
How Contributions Work
- Employee Share: 10% of Basic + DA
- Government Share: Additional 8.5% of Basic + DA
All contributions are directed to your PRAN (Permanent Retirement Account Number) for easy tracking.
What is the Pool Corpus?
UPS creates a central Pool Corpus, supported by:
- Government’s 8.5% contribution
- Transfer of retirees’ PRAN balances
- Additional government inputs as needed
This fund ensures long-term sustainability of pension payouts.
Investment Choices Under UPS
You can choose how your corpus is invested:
- LC-25, LC-50, or Active G100 options
- If no option is selected, a default scheme is applied
These choices vary in terms of risk and returns, letting you pick what suits your retirement goal.
Understanding the Benchmark Corpus
A Benchmark Corpus is the target retirement fund value. If your final balance:
- Exceeds the benchmark: You get the surplus
- Falls short: You can top-up or get proportionally reduced pension
This ensures fair and efficient retirement planning.
Eligibility for Receiving Benefits
To receive pension and other benefits under UPS:
- Minimum 10 years of government service for basic eligibility
- 25 years or more to get full 50% of your average basic pay
- Voluntary retirees get benefits from notional superannuation date
Note: Those dismissed, removed, or who resign do not qualify for pension under UPS.
Benefit Structure of UPS
- Assured Monthly Pension: 50% of average last 12 months’ basic pay
- Minimum Pension: ₹10,000 per month
- One-Time Lump Sum: 1/10th of Basic + DA for every 6 months of service
- Family Pension: 60% of last drawn pension for the spouse
- Dearness Relief: Applied to both pension and family pension
Withdrawal Options
At Retirement:
- Withdraw up to 60% of the corpus as a lump sum
- The rest is used to fund monthly pension
During Employment:
- Up to 3 withdrawals allowed (25% of employee’s contributions each time)
- Eligible for specific needs like:
- Home purchase
- Children’s education or marriage
- Serious illness
- Skill development
Withdrawals are voluntary, and amounts can be refunded to restore pension benefits.
UPS vs. NPS: A Quick Comparison
| Feature | Unified Pension Scheme (UPS) | National Pension System (NPS) |
| Employer Contribution | 8.5% of Basic + DA | 14% of Basic + DA |
| Pension Type | Fixed monthly payout (50% of avg. pay) | No guaranteed pension, market-linked |
| Minimum Guarantee | Yes (₹10,000/month for 10+ years) | No |
| Family Pension | 60% of last pension | Based on annuity plan |
| Inflation Adjustment | Yes (via Dearness Relief) | No |
| Withdrawal Limit | Up to 60% at retirement | Same, with annuity purchase for balance |
How Are Payments Processed?
- Submit the relevant forms to DDO
- Application is verified and sent to PAO
- PAO issues payout orders to the NPS Trust
- Funds (lump sum, monthly pension, DR) are credited to your bank account
If corpus is below benchmark, pension is adjusted unless topped up.
In Case of Death
- Before Retirement: Nominee receives PRAN corpus
- After Retirement: Spouse receives 60% of pension plus DR
Final Thoughts
The Unified Pension Scheme (UPS) is a transformative step toward making India’s retirement system more reliable, inclusive, and easy to manage. With guaranteed payouts, inflation protection, and flexibility in investment, UPS aims to secure your future with dignity.
If you’re eligible, consider enrolling during the initial window and review your long-term financial plans accordingly. After all, a secure retirement is not a luxury — it’s a right.
FAQs About UPS
1. Who is not eligible for UPS assured payout?
Employees who serve less than 10 years or are dismissed, removed, or resign are not eligible.
2. What is the minimum guaranteed pension?
₹10,000 per month after 10 years of service.
3. How can I check my UPS details?
Track using your PRAN via the CRA portal or internal payroll system.
4. What happens if I die after joining UPS?
Your nominee or spouse gets benefits depending on when the death occurred.
5. How much do I contribute?
10% of Basic + DA; Government adds 8.5%.
