Unified Pension Scheme provides benefit of both old and new pension scheme

New Delhi, Aug 25: The Modi government has approved a new pension scheme on Saturday called the Unified Pension Scheme (UPS), which will come into effect from April 1 2025.

The opposition parties were queueing up to bring back the old pension scheme (OPS) which was replaced by new pension scheme (NPS) in 2004. The new pension scheme was based on defined contribution by employees and employers, which was to be invested in select funds and amount of pension were dependent on the returns on the investments.

Government says the Unified pension scheme has the advantages of the previous old pension scheme and features of the new pension scheme.

The UPS has provisions for a fixed pension amount, a guaranteed and predetermined sum of money that a retiree will receive regularly after retirement.

The UPS ensures that all central government employees who have served for 25 years or more, will receive 50 per cent of their last drawn salary from the past 12 months as pension. Additionally, those employees will also be eligible for post-retirement inflation-linked increments in their pension amount.

In April 2023, a committee led by then finance secretary T V Somanathan, has recommended for the Unified Pension scheme which was approved by Modi cabinet on Saturday.

Under the UPS there will be a provision of a fixed and assured pension, unlike the NPS which does not promise a fixed pension amount.

For those employees who have completed 25 years or more of service, UPS provides for them a pension amount of 50 per cent of their basic pay earned during the last 12 months preceding retirement.