The Central Government has notified the Unified Pension Scheme (UPS) as an option under the National Pension System (NPS) for Central Government employees. It aims to provide assured payouts and specific retirement benefits. Apart from basic pension these employees will also get dearness relief in line with the ones given to existing employees.The Pension Fund Regulatory and Development Authority (PFRDA) will oversee UPS regulations and provide operational guidelines. The scheme’s effective date is April 1, 2025.
What is the eligibility under UPS?
Employees who retire after fulfilling certain requirements—such as superannuation, FR 56(j) retirement, or voluntary retirement after 25 years—are guaranteed benefits under the UPS. Employees who resign before fulfilling the requirements or are fired for disciplinary reasons are not eligible to get benefits under the Unified Pension Scheme, nevertheless.Also read: Unified Pension Scheme (UPS) for central government employees approved: 5 important things to know
Superannuation after 10 Years of Service
Employees are eligible for an assured payout if they retire after completing a minimum of 10 years of qualifying service, starting from their date of superannuation (official retirement age).
Retirement Under FR 56 (j):
Employees who are retired by the Government under Fundamental Rules (FR) 56(j)—a provision allowing retirement in the public interest for efficiency, before the regular superannuation—are eligible for assured payouts.
Important Note: This retirement is not a penalty under the Central Civil Services (Classification, Control, and Appeal) Rules, 1965.Voluntary Retirement with 25 Years of Service:
Employees who take voluntary retirement after completing at least 25 years of service are eligible.
In this case, the payout will commence from the date the employee would have reached the superannuation age, had they continued working.
Who is not eligible for UPS?
Assured Payout will not be provided in the event of an employee’s removal, discharge, or resignation. In such instances, the Unified Pension Scheme option will not apply.
What are the assured payout rules under UPS?
Subject to other conditions stated in the Ministry of Finance notification dated January 24, 2025, Assured Payout under the scheme shall be as follows, namely:
Full Assured Payout
The entire assured payout is 50% of the average basic wage over the last 12 months before retirement. This full payout is only available to employees with at least 25 years of eligible service.
Proportionate Payout for Lesser Service
If the employee has less than 25 years of qualifying service, he/she will get a proportional compensation based on their service time. For example, someone who served 15 years will receive a lower payout than someone who served 25 years, based on their service ratio to 25 years.
Minimum Guaranteed Payout
Employees who superannuate after 10 or more years of service are assured a minimum monthly payout of Rs 10,000, even if the calculated amount based on their service and basic pay is lower.
Payout for Voluntary Retirement (Post 25 Years)
The guaranteed payout will only begin to be paid to employees who voluntarily retire after 25 years of service on the day they would have attained superannuation age (had they remained employed until official retirement).
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