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The Government of India has notified the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025, in the official gazette. The rules, issued by the Department of Pension and Pensioners’ Welfare (DoPPW), operationalize the Unified Pension Scheme (UPS) introduced earlier in April 2025 and regulate service matters and retirement benefits for Central Government employees opting for it under the National Pension System (NPS).

Evolution of Pension Systems in India

• Historically, Central Government employees appointed before January 1, 2004 were covered under the Old Pension Scheme (OPS), a defined-benefit system guaranteeing 50% of the last drawn basic pay without employee contribution. Employees joining after this date were brought under the National Pension System (NPS)—a market-linked, contributory framework where the pension depends on corpus accumulation and market returns.
• In response to persistent demands to restore the security of OPS while maintaining fiscal prudence, the Union Cabinet approved the Unified Pension Scheme (UPS) in August 2024. Effective from April 1, 2025, it offers a middle ground between the assured benefits of OPS and the sustainability of NPS.

Salient Features of the Unified Pension Scheme

The UPS guarantees an assured pension of 50% of the average basic pay of the last 12 months before retirement, provided the employee has completed at least 25 years of service. In the event of the pensioner’s death, the spouse is entitled to 60% of the pension.

• Contribution pattern: Both employee and employer contribute 10% of basic pay plus DA, while the government adds an additional 8.5% to create a pooled corpus ensuring assured payouts.
• Minimum pension: ?10,000 per month after 10 years of service.
• Lump-sum benefit: One-tenth of the last basic pay plus DA for every six months of service.
• Ineligibility: Employees dismissed, removed, or compulsorily retired as a penalty are excluded from UPS benefits.

This structure blends assured returns with shared contributions, balancing financial security for employees and fiscal discipline for the government.

Switch Facility: UPS–NPS Flexibility

The 2025 Rules provide employees a one-time switch option between the two schemes:

• Employees under UPS may switch to NPS once—but cannot revert to UPS thereafter.
• The option must be exercised at least one year before superannuation or three months before voluntary retirement (VRS).
• The switch is prohibited in cases involving dismissal, removal, or ongoing disciplinary action.
• Those not exercising the option within the stipulated time (September 30, 2025) will continue under UPS.
• Employees switching to NPS will receive its benefits plus a 4% differential contribution.

The provision seeks to ensure informed choice and flexibility in retirement planning.

Implementation and Challenges

Though 23.94 lakh employees are eligible to opt for UPS, only around 40,000 have done so. The DoPPW is conducting awareness campaigns to clarify benefits, yet many employees perceive UPS as less attractive than the non-contributory OPS. Employee associations, including the Central Secretariat Service Forum, have continued to advocate for a full return to the old system.

Significance

The Unified Pension Scheme represents a recalibration of India’s pension architecture, merging assured post-retirement income with contributory discipline. It aims to protect employees from market volatility while containing long-term fiscal liabilities. Through the CCS (UPS) Rules, 2025, the government has institutionalized a flexible, transparent, and sustainable framework, marking an important step in public financial management and social security reform.