Top Stories Centre Announces Unified Pension Scheme: Retired NPS Employees Eligible to Opt for UPS [Read Notification] The Unified Pension Scheme guarantees 50% of the last 12-month average basic pay as a monthly pension for Central Government employees with 25+ years of service By Kavi Priya – On January 26, 2025 10:40 am – 5 mins read

The Ministry of Finance, through Notification No. FX-1/3/2024-PR dated 24th January 2025, has introduced the Unified Pension Scheme (UPS) as an option under the existing National Pension System (NPS). The new scheme aims to provide Central Government employees with assured payouts, additional benefits, and greater financial security post-retirement. This scheme, effective from 1st April 2025, applies to Central Government employees currently covered under NPS and those who opt for UPS. Employees who retired before this date can also switch to UPS under specified conditions. The Unified Pension Scheme (UPS), as announced by the Ministry of Finance, is designed for Central Government employees who are covered under the National Pension System (NPS) and choose to opt for this scheme. The scheme includes specific eligibility conditions and exclusions, ensuring that the benefits are accessible under defined circumstances. Become a PF & ESIC expert with our comprehensive course –

Enroll Now Conditions for Assured Payouts Employees are eligible for assured payouts under the following circumstances: (a) Superannuation After Qualifying Service: Employees who complete 10 years of qualifying service will receive payouts from the date of their superannuation. (b) Retirement Under FR 56(j): Employees retired by the government under the provisions of FR 56(j) (not as a penalty under the Central Civil Services (Classification, Control, and Appeal) Rules, 1965) will be eligible for payouts starting from their retirement date. (c) Voluntary Retirement: Employees opting for voluntary retirement after a minimum of 25 years of qualifying service will receive payouts from their notional superannuation date (i.e., the date they would have retired had they continued in service). The scheme explicitly excludes certain categories of employees from receiving assured payouts: Employees who are dismissed or removed from service are ineligible.

Employees who resign from their posts will not qualify for assured payouts under the UPS. Become a PF & ESIC expert with our comprehensive course – Enroll Now Benefits Under the Unified Pension Scheme 1. Assured Payout Employees with at least 25 years of qualifying service are entitled to a payout equal to 50% of the average basic pay from the last 12 months before superannuation. Employees with less than 25 years of qualifying service will receive proportionate payouts based on their years of service. Employees with at least 10 years of qualifying service are assured a minimum of ₹10,000 per month. For employees opting for voluntary retirement after 25 years, payouts will begin from the date of their notional superannuation (if service had continued). Become a PF & ESIC expert with our comprehensive course – Enroll Now 2. Family Benefits: In case of the employee’s demise after superannuation, the spouse (legally wedded at the time of superannuation, voluntary retirement, or FR 56(j) retirement) will receive 60% of the assured payout. 3.Dearness Relief (DR): DR is applicable on both assured and family payouts. It will be calculated in the same manner as Dearness Allowance (DA) for serving employees. DR is only payable when the payout starts. 4. Lump Sum Payment: Employees are entitled to a lump sum amount of 10% of monthly emoluments (basic pay + DA) for every six months of completed service. This lump sum does not reduce the assured payout. 5.

Dual Corpus Structure Become a PF & ESIC expert with our comprehensive course – Enroll Now The funding for the scheme is divided into two parts: Individual Corpus: Contributions from the employee (10% of basic pay + DA) and an equal contribution from the Central Government will be credited here. Pooled Corpus: The Central Government will contribute an additional 8.5% of basic pay + DA to support assured payouts for all employees opting for UPS. 6. Investment Choices: Employees can make investment choices for their individual corpus, regulated by the Pension Fund Regulatory and Development Authority (PFRDA). A default investment pattern applies if no investment choice is exercised. Investment decisions for the pooled corpus will solely rest with the Central Government. 7. Provisions for Retired Employees: Employees who retired under NPS before the implementation of UPS can opt for this scheme. The PFRDA will determine mechanisms for adjusting the top-up amount and ensuring eligibility for assured payouts. 8. Explanation of Basic Pay: For medical officers, the non-practicing allowance (NPA) in lieu of private practice is included as part of the basic pay for determining benefits under UPS.

Become a PF & ESIC expert with our comprehensive course – Enroll Now Option to Choose UPS Eligibility to Choose:Existing Central Government employees under the National Pension System (NPS) as of the scheme’s effective date can opt for UPS. Future Central Government employees may also choose UPS upon joining. Finality of Choice:Once an employee opts for UPS, the decision is irrevocable. Employees must adhere to all stipulations and conditions of the scheme. Transfer of Existing NPS Corpus Employees opting for UPS will have their outstanding NPS corpus (from their Permanent Retirement Account Number) transferred to the individual corpus under UPS.

Benchmark Corpus Calculation For employees opting for UPS, a benchmark corpus value will be computed based on: Regular Contributions: Assumes all applicable employee and employer contributions have been made for each qualifying service month. Missing Contributions: The Pension Fund Regulatory and Development Authority (PFRDA) will assign an appropriate value for any missing contributions. Investment Pattern: Assumes investments are made per the default pattern defined by PFRDA. Regular Updates to Employees Employees will receive periodic updates on the value of their individual corpus (based on their investment choices) and the corresponding benchmark corpus value. Superannuation and Retirement Provisions The qualifying service period will be verified by the employee’s Head of Office. At retirement, employees must authorize: Transfer of the individual corpus value or units to the pooled corpus, equivalent to the benchmark corpus value. If the individual corpus falls short of the benchmark, employees may contribute additional funds to bridge the gap. Any excess funds in the individual corpus beyond the benchmark will be credited to the employee. Become a PF & ESIC expert with our comprehensive course – Enroll Now

Payout Adjustments If the corpus transferred is less than the benchmark corpus, the assured payout will be adjusted proportionately. Fund-Based Pension System The scheme’s functionality depends on timely contributions and investments from both employees and the employer to ensure the promised assured payouts. Exclusion from Additional Benefits Employees who opt for UPS cannot claim any other: Policy concessions. Financial benefits or parity with future retirees. Post-retirement changes or enhancements.

Become a PF & ESIC expert with our comprehensive course – Enroll Now Provisions for Past Retirees Past NPS retirees can also opt for UPS, subject to specific adjustments: Arrears for past periods will be paid along with interest calculated at Public Provident Fund (PPF) rates. Monthly top-up amounts will be determined by PFRDA after adjusting withdrawals and annuities. Disciplinary Proceedings Separate provisions will be notified for employees facing disciplinary actions at the time of superannuation or for whom disciplinary actions are considered post-retirement. The PFRDA may issue regulations to operationalize and manage the scheme effectively.