In a major update for central government employees, the government has announced several changes to the retirement and pension rules that will come into effect in 2025. According to a recent report, these reforms are aimed at improving the pension structure, speeding up retirement processing and ensuring better post retirement financial security for employees.
One of the most significant changes is the introduction of the Unified Pension Scheme. This scheme combines features of the old pension system and the New Pension Scheme i.e. combo of OPS and NPS. Under the UPS, any government employee completing 25 years of service will receive a pension equal to 50% of their average basic salary for the last 12 months before retirement. Moreover, employees with at least 10 years of service will now be eligible for a minimum guaranteed pension of ₹10,000 per month.
The report also mentions that the Dearness Allowance (DA) and Dearness Relief (DR) for pensioners will see a double revision this year a 2% hike for January to June and a 3% hike for July to December 2025, taking the total DA to approximately 58%. This will provide relief to both serving employees and retirees coping with inflation.
Another major improvement is in the retirement file processing system. The Department of Pension and Pensioners’ Welfare (DoPPW) has directed all departments to start processing retirement files 12 to 15 months before the actual date of retirement. This measure ensures that all dues such as pension, gratuity and commuted value are released promptly from the very day of retirement, avoiding delays that have been common in the past.
Additionally, the Dress Allowance will now be calculated on a pro-rata basis for employees retiring mid-year rather than being paid in full for the entire year. This change brings more fairness and clarity to the allowance structure. The new policy also revises gratuity and lump sum benefits to offer better financial cushioning for retirees.
Overall, these changes reflect the government’s effort to create a fair, efficient and employee friendly retirement system. The blend of the UPS with procedural improvements is expected to significantly benefit employees nearing retirement providing both financial stability and administrative ease.
Source: The Financial Express
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