Govt NPS Retirees with Over 10 Years of Service Can Claim Extra Pension Under New UPS by June 30

In a significant policy step aimed at easing the post-retirement burden for former civil servants, the Indian government has announced that central government employees who retired under the National Pension System (NPS) on or before 31 March 2025, and who have completed a minimum of 10 years of qualifying service, are eligible to claim additional pension benefits under the Unified Pension Scheme (UPS). According to Business Standard, retirees or their spouses must submit their claims by 30 June 2025.

The Unified Pension Scheme (UPS), notified by the Finance Ministry in January, provides an assured monthly pension of 50 per cent of the average basic pay drawn over the last 12 months before retirement. This marks a major departure from the earlier market-linked annuity model under NPS, offering more stability and predictability to retirees.

The scheme applies to central government employees covered under NPS since its inception on 1 January 2004, who now have the option to switch to the UPS. Under the scheme’s framework, the top-up pension is computed by deducting the representative annuity (based on NPS returns) from the assured monthly payout, which also includes dearness relief (DR).

In a press release quoted by Business Standard, the Finance Ministry stated that retirees opting for UPS will also receive a one-time lump sum calculated as one-tenth of their last drawn basic pay plus dearness allowance for every completed six months of qualifying service. “Arrears will be paid with simple interest calculated as per applicable PPF rates,” the Ministry added in its statement.

This reform potentially affects over 23 lakh central government employees eligible under NPS. However, the full 50 per cent assured pension rate under UPS requires a minimum qualifying service of 25 years, while the limited benefits announced this week cover those with at least 10 years of service.

The government’s pension reform push comes amid growing concerns over the long-term adequacy of NPS returns, especially in times of market volatility. The UPS announcement follows recent demands by government staff unions seeking parity with the old pension system. Though UPS doesn’t fully restore the pre-2004 pension regime, it aims to strike a balance between fiscal prudence and pension security.

The decision aligns with broader Budget 2025 initiatives targeting social security improvements, including plans to enhance pension coverage for gig economy workers and low-income earners. The UPS thus becomes a transitional scheme bridging the gap between market-based pensions and guaranteed income for India’s growing pool of retirees.