Good news: Government makes major reforms to employees’ pension, dearness allowance, and retirement rules in 2025

The central government has made several major decisions for its employees and pensioners in 2025. This will provide significant relief to employees; let’s learn more about it.

In 2025, the central government has made several important decisions for its employees and pensioners. These include a new pension scheme, an increase in dearness allowance, improvements to the retirement process, and many other benefits. These changes have been made specifically to make employees’ post-retirement life easier and better. Let’s learn more about these changes.

New Unified Pension Scheme (UPS)

The government launched the new Unified Pension Scheme in April 2025. This scheme combines the Old Pension Scheme and the National Pension System. An employee with 25 years of service in the UPS will receive a pension of 50% of their basic salary for the last 12 months. Employees with at least 10 years of service will receive a guaranteed minimum monthly pension of ₹10,000.

Dearness Allowance (DA/DR) Increase

In 2025, the government increased the dearness allowance twice. DA was increased by 2% from January to June and 3% from July to December. The total DA now stands at 58%. This will increase the monthly income of employees and pensioners and mitigate the impact of inflation.

Speeding Up the Retirement Process

Previously, it took a long time to receive a Pension Pass Order (PPO). Now, the government has mandated that departments prepare employees’ files 12-15 months before retirement. This will allow pension and other benefits to begin accruing from the date of retirement, providing financial relief to employees.

Dress Allowance Now Based on Service

Previously, dress allowance was paid once a year for the entire year, even if an employee retired mid-year. Now, if an employee retires mid-year, they will receive dress allowance based on their months of service, i.e., a pro-rata payment.

Improvements to Gratuity and Lump-Sum

Both the gratuity and lump-sum payments received upon retirement under UPS have been improved. This will provide employees with greater financial security at the time of retirement.

Significance of These Changes

These changes have been made to provide employees with a stable, assured, and timely income after retirement. Employees will now be able to make better decisions based on their service period and needs. This information is especially important for those considering early retirement.

The post Good news: Government makes major reforms to employees’ pension, dearness allowance, and retirement rules in 2025 first appeared on informalnewz.

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