The year 2025 has proved to be special for the central government employees and pensioners. This year, the government has made changes in many important rules related to retirement, pension and allowances, which will have a direct impact on both the pockets and future of millions of employees. Let us understand what these five big changes are and what will be the benefits of them.
New Unified Pension Scheme (UPS) now guarantees pension as well as security
For many years, government employees have been coming under the National Pension System (NPS), in which the pension money was dependent on the market. Due to this, employees remained insecure about their future income. In April 2025, the government has launched the Integrated Pension Scheme (UPS), which is a combination of both the Old Pension Scheme (OPS) and NPS.
Under this new scheme, employees who complete 25 years of service will get a pension of 50% of the average basic salary of the last 12 months. If someone has completed 10 years of service, he will be guaranteed a monthly pension of at least ₹10,000. With this, government employees will now be able to get a stable and reliable pension.
Increase in Dearness Allowance (DA) and Dearness Relief (DR)
To provide relief from the impact of inflation, the government increased DA and DR twice in 2025. There was an increase of 2% between January to June and 3% between July and December. Now DA has reached 58%. This will directly benefit the monthly income of lakhs of employees and pensioners.
Now pension will be available from the day of retirement, new process implemented
Earlier, many retiring employees had to wait for Pension Pass Order (PPO) for months. Now the government has made this process easier. All departments have been instructed to prepare the employee’s retirement file 12-15 months in advance, so that pension and gratuity starts coming from the day of retirement. This change will make the employees financially secure and will provide relief from long wait.
Uniform allowance will now be given according to service period
Earlier, uniform allowance was given as a fixed amount once a year, even if someone retired in between. Now the rule has changed, if an employee retires in the middle of the year, he will get proportionate allowance according to the months.
Correction in Gratuity and Lump Sum Amount
The government has now also improved the rules for gratuity and lump sum payment. Now both the benefits will be available together under the UPS scheme, which will provide strong financial security to the employees at the time of retirement. Earlier NPS employees used to miss this facility, but now they will also get full benefit of it.
Why were these changes necessary?
The objective of all these reforms is the same, to ensure fixed, timely and stable income to government employees after retirement. The government wants that those who serve the country for years should get a respectable and secure life even after service. Overall, these new rules coming into effect in 2025 not only simplify the retirement process but also strengthen the financial security of employees.