Unified Pension Scheme: What will be the minimum pension under UPS after the implementation of the 8th Pay Commission? – Money News

Unified Pension Scheme: The Center last month notified the Unified Pension Scheme (UPS), a guaranteed pension scheme for life, for central government employees. However, employees will have the option to choose between the National Pension System (NPS) and the UPS. Unlike the NPS, the UPS guarantees central government employees a fixed pension which will be equivalent to 50% of their average monthly salary received during the last 12 months preceding retirement.

Let’s see how the UPS minimum pension might change once the 8th Pay Commission is implemented, which is expected to come into effect from January 1, 2026. However, it is important to note that there has been no official confirmation from the government. regarding the 8th Pay Commission. The idea for its implementation is based on media reports, which suggest that the new pay commission’s recommendations could be in place from January 2026. This speculation aligns with past trends, where the The government generally implements new recommendations from the Pay Commission every 10 years to review the salaries and pensions of central civil servants and retirees.

Before calculating the UPS pension, it is important to first understand the trend in salaries and pensions of central government employees once the 8th Pay Commission comes into force. Salaries of different levels of government personnel will be revised based on a specific adjustment factor. For example, under the 7th Pay Commission, an adjustment factor of 2.57 was applied to salary revisions.

Also read: 8th Pay Commission: Should the minimum salary of central government employees be increased to Rs 51480? Check the calculation

Likely adjustment factor under 8th Pay Commission

As for the adjustment factor expected under the 8th Pay Commission, various reports suggest that the government could settle for a factor of 1.92. However, according to a report by NDTV Profit, Shiv Gopal Mishra, secretary (personnel side) of the National Council for Joint Consultative Mechanisms (NC-JCM), is hopeful that the government will go for a higher adjustment factor of at least 2, 86.

Minimum salary and pension expected under the 8th Pay Commission

If this adjustment factor of 2.86 is applied, the minimum basic salary of a government employee would increase to Rs 51,480, up from the current minimum salary of Rs 18,000. Similarly, pensions would increase to Rs 25,740, compared to the current pension of Rs 9,000, if the adjustment factor is fixed at 2.86.

The UPS, which is due to come into force on April 1, 2025, guarantees a pension equivalent to 50% of the average salary earned during the last 12 months preceding retirement. On this basis, the likely minimum pension under UPS would be Rs 25,740, assuming the adequacy factor is 2.86.

However, this pension amount depends on the assumption that the equivalence factor will actually be set at 2.86. If the adjustment factor changes, it would result in a corresponding change in the minimum wage and pension of central government employees once the 8th Pay Commission is implemented.

Also Read: 8th Pay Commission Formation: ‘Time has come for announcement…Government will take the decision’ – Key Takeaways from Staff-Government Meeting

Other key points under UPS

The UPS, like the OPS, has a guaranteed pension. The UPS will also ensure that there is a minimum pension of Rs 10,000 for a retiree from a government job provided the individual completes 10 years of service. In the event of the pensioner’s death, his or her spouse will receive 60% of the fixed pension.

To become eligible for a full pension under the UPS, the employee must have completed at least 25 years of service. If the employee serves less than 25 years, a prorated truncated pension will be paid.