Maharashtra government employees covered under the National Pension System (NPS) can now opt for a revised pension scheme that provides up to 50 per cent of the last drawn salary as pension after retirement, according to a circular issued by the state finance department on Wednesday, May 6, 2026. As reported by news agency PTI, the Maharashtra cabinet had previously approved implementation of this revised NPS for state government employees on the lines of the Centre's Unified Pension Scheme (UPS). The government had earlier allowed eligible employees to submit their option to join the revised scheme by December 31, 2026, with the latest circular confirming that the scheme remains optional for employees covered under the existing NPS framework.
According to the circular, employees retiring at the prescribed age with 20 years or more of service will be entitled to a pension equal to 50 per cent of their last drawn salary, along with dearness allowance. Employees with 10 to 20 years of service will receive a proportionate pension based on their last drawn salary. The minimum pension under the revised scheme has been fixed at ₹7,500 per month for employees retiring after at least 10 years of service. Employees with less than 10 years of service will not be eligible for pension benefits, as reported by PTI. The revised NPS was launched on the lines of the Centre's unified pension scheme (UPS), a default pension scheme for new recruits joining the central government from April 1, 2025.
The circular stated that employees opting for the revised scheme must deposit 60 per cent of the accumulated corpus received from the Pension Fund Regulatory and Development Authority (PFRDA) with the government through the drawing and disbursing officer at the time of retirement. The remaining 40 per cent of the accumulated corpus will be used to purchase an annuity, and the annuity amount will be adjusted against the pension payable by the state government. The state government circular dated May 6, 2026 stated that any withdrawals made from the NPS corpus need to be returned along with 10 per cent interest, failing which the pension would be reduced proportionately. The government also said that any withdrawals made earlier from the NPS corpus must be refunded with 10 per cent interest by employees opting for the revised scheme, failing which pension entitlement will be reduced accordingly.
As reported by PTI, employees resigning from service will not be eligible for pension benefits under the revised scheme and will continue under the existing NPS framework. The circular also said retirement gratuity would apply to employees opting for the revised scheme as per earlier government orders issued in March 2023. The provisions will also apply, with suitable modifications, to employees of aided educational institutions, agricultural universities, affiliated non-government colleges, zilla parishads and panchayat samitis. The finance department said a separate detailed procedure for pension disbursement under the revised scheme will be issued later, with a detailed procedure for the disbursement of pension now awaited.
The move is significant as it gives Maharashtra government employees an option between the market-linked NPS structure and a more assured pension-based system similar to the old pension model. According to PTI reports, the revised scheme is expected to benefit employees seeking predictable post-retirement income amid growing demand for guaranteed pension structures across states and central government services. To bring parity between the two pension schemes, the government had announced that UPS would also offer tax benefits just like NPS. This provides employees with a choice between the existing market-linked NPS and a more assured pension structure that offers greater predictability for retirement planning.
