The Indian government brought forward the scheme Unified Pension Scheme (UPS), from April 1, 2025, that combines the characteristics of Old Pension Scheme (OPS) and National Pension System (NPS). Introduced on January 24, it is meant to respond to the demands of 56 lakh employees to restore OPS and at the same time make it fiscally sustainable.
Why OPS Matters
The OPS which was abolished in 2004 ensured an employee with 50 percent of his or her pension draw rate at the time of final draw without any employee contribution. Contrary to the market-linked NPS, it guaranteed financial security, and hence in its revival, security is one of the main demands among the government employees to receive consistent retirement income.
UPS Key Features
The UPS bases its guaranteed pension at 50 percent of the average basic pay in the last year 25 consecutive years of service. Employees who have 10-24 years will be provided on a pro-rata basis with a minimum of 10,000 per month after 10 years of service even within the constraints of reliability.
Dearness Relief Included
In UPS there is no such thing as non-indexed pension, rather they are adjusted to Dearness Relief to overcome rising inflation, as in OPS. This guarantees the retirees that they do not lose purchasing power, which is a significant disadvantage of the NPS in that the pension is not fixed and varies during good and bad times in the market.
Retirement and Death Benefits
Retirement and death gratuity are included in the benefits given by UPS, which matches the OPS. Employees have the option to subscribe UPS, or NPS, and disability or death cover under CCS (Pension) Rules as a provision that adds to social security of the families.
State-Level OPS Revival
Other states such as Rajasthan, Punjab andoush; Himachal Pradesh, have now reverted to OPS even to pre-2004 appointees. Nevertheless, the central government refuses to refund the money contributed to NPS in these states, explaining it by the PFRDA rules.
Key Employee Actions
- Check eligibility for UPS through your employer.
- Update pension records with Aadhaar/PAN for smooth transitions.
- Monitor state-specific OPS updates via official channels.
- Consult unions for ongoing OPS restoration campaigns.
- Verify pension calculations for accuracy.
Pension Scheme Comparison
| Scheme | Pension Basis | Contribution | Min. Service | Min. Pension |
|---|---|---|---|---|
| OPS | Last drawn pay | Non-contributory | 10 years | Not specified |
| NPS | Market-based | Employee + Employer | Not specified | Not guaranteed |
| UPS | Avg. basic pay (12 months) | 10% employee, 18.5% govt | 10 years | ₹10,000/month |
Future Outlook
UPS is working on most OPS demands but there is a need to work on full restoration which is driven by unions. Employees of central government are expected to keep themselves updated through official websites The UPS has a moderate solution even though arguments about fiscal affordability and employee benefits are present.
Also read: Home Rent Rules 2025: No More Sudden Rent Hikes or Arbitrary Evictions