Pension for new government employees: NPS, UPS and the old pension

National Pension System (NPS)

Central civil employees who joined on or after 1 January 2004 are covered by NPS, not the old pension. You contribute 10% of basic pay plus DA each month and the government adds 14%. The money is invested, and your pension depends on how much has built up and on annuity rates when you retire.

At retirement you can take part of the corpus as a lump sum and must use the rest to buy a pension.

Unified Pension Scheme (UPS)

From 1 April 2025 the central government offers the Unified Pension Scheme as an option to employees under NPS. Its main promise is an assured pension of 50% of the average basic pay of the last 12 months for those who complete at least 25 years of service, with a proportionately lower pension for shorter service and a minimum assured amount after 10 years.

Under UPS the employee still contributes 10%, and the government contributes more than under NPS. Choosing between NPS and UPS is a personal decision that depends on your age at joining and how long you expect to serve.

Pension rules are changed by government orders from time to time. Confirm the options open to you with your department when you join.

The old pension scheme

Under the old scheme, employees who joined before 2004 get 50% of last pay as pension with no contribution of their own. It is closed to new central civil recruits.

The armed forces remain on a defined-benefit pension and are not under NPS. This applies to regular soldiers and officers, not to Agniveers, who get a lump sum and no pension.

States and banks

Each state decides for itself. Most adopted NPS in the mid-2000s; a few have announced a return to the old scheme or their own assured-pension variants. Check the current rule in the state you are applying to, because it affects your take-home pay as well as your retirement.

Public sector banks and insurers put employees who joined after 2010 under NPS-style contributory pensions.