Unified Pension Scheme (UPS) to Roll Out from April 1, New Framework Notified

23 March, 2025
Unified Pension Scheme (UPS) to Roll Out from April 1, New Framework Notified

Winning Bizness Desk

Mumbai.The Pension Fund Regulatory and Development Authority (PFRDA) has officially notified the Unified Pension Scheme (UPS), which will come into effect on April 1, 2025. Initially announced on August 24, 2024, UPS aims to provide a structured pension system for central government employees. State governments may also adopt the scheme for their workforce.

Guaranteed Pension and Coverage

UPS guarantees a minimum pension of ₹10,000, with a maximum cap of 50% of the average salary drawn in the last 12 months before retirement. The scheme is applicable to:

  • Central government employees
  • State government employees (if adopted by respective states)

Application Process and Deadline

Eligible employees can apply through the Protean Central Recordkeeping Agency (CRA) website using designated forms. Applications can be submitted online or offline to the Drawing and Disbursing Officer (DDO). Employees must opt for UPS within three months from April 1, 2025, unless an extension is granted. Once chosen, the option is final and cannot be reversed.

Investment Options for Subscribers

Like the National Pension System (NPS), UPS allows subscribers to select their pension fund and investment strategy. If no selection is made, a default investment plan will be assigned. Subscribers can change their pension fund once a year and modify their investment choices twice a year.

How UPS Differs from NPS

UPS incorporates features of both the Old Pension Scheme (OPS) and NPS. While it remains a contributory scheme like NPS, it provides assured pension benefits similar to OPS. The employee contribution rate under UPS is set at 10%, whereas the government’s contribution is 18.5%, higher than the 14% under NPS.

Impact and Beneficiaries

According to government estimates, nearly 23 lakh employees will benefit from UPS. The scheme aims to address concerns over post-retirement financial security while maintaining a structured, investment-backed pension system.

Timeline of UPS Development

  • August 24, 2024: Government announces the Unified Pension Scheme.

  • March 2025: PFRDA officially notifies the UPS regulations.

  • April 1, 2025: UPS comes into effect.

  • June 30, 2025: Deadline for employees to opt for UPS, unless extended.