PFRDA’s Unified Pension Scheme for central government employees ensures guaranteed payouts and flexible investment options
Through its recent announcement, the PFRDA declared official guidelines for the Unified Pension Scheme (UPS). Starting April 1, 2025, central government employees will have a complete replacement option for NPS through the UPS. The guidelines established by the PFRDA now define who qualifies and contributes and determine retirement benefits and other aspects.
Who Can Participate in the UPS?
Employee access to the UPS begins April 1, 2025, for all present central government workforce members who choose NPS. Recruits entering central government services must decide to join the scheme within 30 days after they become part of their service from the designated date. Retired individuals from NPS and those who voluntarily left service or retired through special departmental procedures within March 2025 can join the UPS. The legally wedded spouse of a deceased government employee can join UPS as long as the employee is enrolled in NPS and has not selected UPS previously.
Contribution and Benefits Under UPS
The United Progressive Scheme requires central federal workers to deposit 10% of their base pay, including all eligible allowances. After contributing 10% of the basic salary, the government will allocate equal funds to each employee’s UPS account. The government plans to donate 8.5% of employees’ basic pay and allowances to support assured payouts through UPS.
Workers who fulfil the requirement of serving 10 consecutive years will receive at least Rs 10,000 from the monthly benefits of the scheme. Workers under the scheme must choose their favourite pension fund and investment choices. Participants who fail to select their pension fund will be placed into the default fund option by default.
Withdrawal Rules and Payouts
Any employee taking part in the UPS plan has access to withdraw 25% of total contributions after waiting three years for the lock-in period to finish. Particular conditions, including residential property acquisitions and construction, bound the withdrawal options. Workers who superannuate within nine years or less of their employment are disqualified from receiving the assured payout benefits. The amount paid out decreases when the retired employee has insufficient retirement savings.
The new scheme pays 60% of the monthly payout to family members who survive their deceased employee. Family members receive financial support from the new pension scheme for an extended period after the member’s retirement.
Investment Options for Subscribers
Employees who choose UPS can choose investment options where government securities and lifecycle-based schemes are available. These choices allow workforce members to easily control their pension funds for better alignment of retirement preparation with financial objectives. The government´s decision to restrict annuity service providers from UPS might affect their capability to participate in upcoming retirement strategies.
