The Central Government has launched a new pension scheme, Unified Pension Scheme (UPS) among government employees across India. This reform has replaced several pension schemes that were previously in place for central and state government employees.
What is Unified Pension Scheme?
The Central Government introduced the Unified Pension Scheme (UPS) for Central Government employees aiming to provide stability, dignity and financial security. It launched on April 1, 2025, specifically as an alternative for central government employees who are currently part of the National Pension System.
Currently, government employees are covered under the National Pension System (NPS). Government employees can continue with NPS or switch to the UPS scheme. The Unified Pension Scheme aims to offer a more predictable and stable income after retirement.
Who won’t get the benefit?
- If you’ve been employed for less than 10 years.
- If an employee has been dismissed from service.
- Or if someone has voluntarily left the job.
UPS vs NPS: Key Differences for Employees
| Feature | Unified Pension Scheme (UPS) | National Pension System (NPS) |
| Payout | Assured, fixed monthly pension (min Rs. 10,000) | Market-linked, variable |
| Goverment Contribution | 10% of basic + DA + extra for assured payout | For central government employees, the government currently contributes 14% of basic plus DA, while employees contribute 10% |
| Gratuity Benefit | Yes | No |
| Pension Calculation | 50% of average 12-month basic pay (25 year’s service) | Based on accumulated market returns |
| Switching Option | Irrevocable, deadline-based | Default option if UPS not chosen |
| Flexibility | Low (choice is final) | Higher (early exit, partial withdrawal) |
Under the Unified Pension Scheme, employees receive a guaranteed pension of ₹10,000. Central government employees already enrolled in the NPS will have the option to switch to the UPS.
The Unified Pension Scheme is specifically designed for retirement. Under this scheme, employees receive the benefit of a guaranteed pension, along with a minimum pension and a family pension.