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According to the notification on the Unified Pension Scheme, central government employees will have to fulfill several conditions in order to get 50 per cent pension of their last salaries post superannuation.
Under the Unified Pension Scheme, the assured payout will be calculated based on the last 12-month salary, months of qualified service, and retirement corpus.
Unified Pension Scheme: Even as the Centre has notified the Unified Pension Scheme (UPS) as an option under the National Pension Scheme (NPS), central government employees will now choose either of the two as their preferred retirement scheme. The UPS scheme was announced following a long-standing demand from government employees to restore the old pension scheme (OPS), which assured 50 per cent of their last salary as pension. Will all employees now receive full 50 per cent pension or assured payout under the UPS?
According to the Unified Pension Scheme notification dated January 24, 2025, employees will have to fulfill several conditions in order to get full 50 per cent pension of their last salaries post superannuation.
A formula has been finalised to calculate the assured payout under the Unified Pension Scheme. The formula is:
Assured payout = (P/2) x (Q/300) x (IC/BC)
In this formula, P is the average of the past 12-month basic pay, Q is the number of months in service, IC is the individual corpus, while BC is the benchmark corpus. According to the notification, if Q exceeds 300, it will be taken as 300.
According to this formula, only those employees who get salary increment on January 1 and resign on December 31, and those who get the hike on July 1 and resign on June 30 will be able to receive the assure payout or pension as exactly 50 per cent of their last month pay (which was the case under the old pension scheme), said an expert, who did not want to be named.
“Obviously, they must fulfil the other two conditions of at least 300 months of service and maintaining their individual retirement corpus (IC) equivalent to benchmark corpus,” according to the expert.
The Unified Pension Scheme notification 2025 PDF can be downloaded from here.
Importantly, the assured payout under the UPS will be calculated based on the last 12-month basic pay of the employees. It is different from the calculation based on the last-drawn salary under the OPS.
So, in order for the employees to get monthly assured payout equivalent to the 50 per cent of their last-month salary (which was the case under the OPS), the conditions to be fulfilled are: 1) Their last 12-month average salary should be the same as their last salary; 2) they should have completed 300 months in services; and 3) their contribution to the retirement corpus should be equal to the benchmark corpus decided by the government.
Unified Pension Scheme: Other Key Fineprints
According to the notification, “In cases of voluntary retirement after a minimum 25 years of qualifying service, assured payout will commence from the date on which the employee would have superannuated, if he had continued in service.”
In simple terms, if an employee joins a government job at the age of 21 and voluntarily retires after 25 years of service at the age of 46, he will be able to receive the assured payout only after the age of 60 (the supperannuation age).
However, dearness relief will be available on the assured payout and family payout.
