Further, in case of demise of the retired employee, then his or her family would be able to avail an assured family pension of 60 per cent of the pension received by the employee immediately before his or her demise. The new scheme also assures a minimum pension of ₹10,000 per month on superannuation after minimum 10 years of service.

Addressing the media on the cabinet decisions, union minister for information and broadcasting Ashwini Vaishnaw said the pension would be based on inflation indexation.

Further, the employee would get a lump-sum payment at superannuation in addition to the gratuity​. It would be one-tenth of the monthly emolument as on the date of superannuation for every completed six months of service​. This payment will not reduce the quantum of assured pension​, said a presentation shown by the minister at the media briefing. 

The new scheme guarantees employees 50 per cent of their average basic pay over the last 12 months before retirement as a pension for a minimum qualifying service of 25 years against a market returns linked payout under the NPS. According to the scheme approved by the Union Cabinet, the pension will be proportionate for a lesser service period of up to a minimum of 10 years. Also, assured pension of Rs 10,000 per month on superannuation after a minimum of 10 years of service. Also Read - RBI constantly working on policies, platforms to make India's financial system strong: Guv Das The scheme has been brought out to address the concerns of government employees over NPS, which came into effect from January 1, 2004. Under the old pension scheme (OPS), effective before January 2004, employees got 50 per cent of their last drawn basic pay as pension. Unlike the old pension scheme, UPS is contributory in nature, wherein employees will be required to contribute 10 per cent of their basic salary and dearness allowance while the employer's contribution (the central government) will be 18.5 per cent. Under the NPS, the employer contribution is 14 per cent, and the employee contribution is 10 per cent. However, the eventual payout depends on the market returns on that corpus, mostly invested in government debt. Employees, under the OPS, were not required to make any contribution. They, however, contributed to the General Provident Fund (GPF). The accumulated amount, along with interest, was paid to the employee at the time of retirement. Also Read - ONGC opens another well in KG field to hike oil production As the NPS was less attractive than the OPS, several non-BJP-ruled states decided to go back to the old pension scheme, which offered a DA-linked benefit. This prompted the Centre to constitute a committee in April 2023, under former Finance Secretary and now Cabinet Secretary-designate TV Somanathan to suggest improvement in the NPS architecture. Fulfilling the long pending demands of government employees ahead of assembly elections in Haryana and Jammu and Kashmir, the Union Cabinet on August 24 approved the UPS, which will provide assured pension to 23 lakh eligible central government employees. Those opting for the UPS will not be able to switch back. The UPS will put an additional burden of Rs 6,250 crore on the exchequer per year. The expenditure will vary every year according to variations in the number of employees. In addition, there will be an arrear of Rs 800 crore that has to be paid under the National Pension System (NPS) to employees retiring before March 31, 2025. If these retirees opt for UPS, they will receive arrears.