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In a significant move to enhance social security for retired central government employees under the National Pension System (NPS), the government has announced additional benefits under the
Unified Pension Scheme (UPS) for eligible retirees. The benefits apply to those who retired on or before March 31, 2025, with a minimum of 10 years of qualifying service, as well as their
legally wedded spouses in the event of the subscriber’s death. Advertisement Under the newly introduced UPS framework, the government aims to bridge the gap between NPS payouts and the
pension amounts provided under the traditional defined benefit pension system. Advertisement Eligible retirees will receive a lump sum amount equivalent to one-tenth of their last drawn
basic pay and dearness allowance (DA) for every completed six months of qualifying service. This benefit is offered as a one-time payout, providing substantial financial support at the time
of retirement. A monthly top-up amount will be provided to ensure parity with the older pension schemes. The top-up is calculated as (Admissible UPS Payout + Dearness Relief) –
Representative NPS Annuity Amount. This ensures that retirees receive a combined pension amount comparable to traditional pension scheme levels after accounting for what they already receive
through their NPS annuity. Eligible beneficiaries will also receive arrears with simple interest calculated at Public Provident Fund (PPF) rates from the date of retirement or death (as
applicable) up to the date of disbursement of UPS benefits. This development is expected to benefit a large number of NPS subscribers who entered government service after 2004 and retired
before the cutoff date. It reflects a growing recognition of the financial challenges faced by retirees under the contribution-based NPS, compared to the more generous defined benefit
pensions of the past. The Unified Pension Scheme is part of the government’s broader effort to provide social and financial justice to long-serving employees, ensuring a dignified
post-retirement life. Advertisement