Retirement Redefined: New Pension Choices for Central Government Employees

The Finance Ministry has unveiled a new initiative providing supplementary benefits to central government employees subscribed to the National Pension System (NPS) and retiring by March 31, 2025. The Unified Pension Scheme (UPS) promises added advantages, including a one-time lump sum payment and guaranteed pension.

Under the new scheme, retirees opting for the UPS can claim one-tenth of their final basic pay in a lump sum for every six months of qualifying service. Additionally, arrears with interest rates aligned to Public Provident Fund (PPF) rates will be available, as per the Ministry's statement issued Friday.

The Ministry's notification, effective from January, provides a pivotal decision point for 23 lakh employees, allowing them to choose between the UPS and the NPS by June 30, 2025. UPS pledges a pension equaling 50% of the average basic pay from the last year of service, pending 25 years of service, eclipsing the market-linked returns of NPS.

(With inputs from agencies.)