Key Highlights
- UPS employees are now entitled to a retirement and death gratuity of up to ₹25 lakh, aligning them with OPS counterparts.
- The scheme, notified on 24 January 2025 and effective from 1 April 2025, offers a one‑time opt‑in for both new and existing central government staff.
- Employees who die or become disabled in service can elect the OPS route, ensuring they receive the enhanced benefits reserved for OPS.
- The reform brings parity between the National Pension System and the Unified Pension Scheme across all major benefit categories.
- All central government employees covered under the NPS are automatically included in this change.
Detailed Insights
The Government of India’s recent decision to extend retirement and death gratuity to Unified Pension Scheme (UPS) participants marks a significant convergence with the Old Pension Scheme (OPS). Under the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, UPS employees can now claim gratuity up to ₹25 lakh, a figure previously exclusive to OPS members.
UPS, introduced by the Finance Ministry on 24 January 2025 and effective from 1 April 2025, provides a one‑time opt‑in mechanism for both new recruits and existing NPS beneficiaries. This flexibility allows employees to choose between the streamlined UPS and the traditional OPS, especially in scenarios of death or disability during service.
In cases of death or disability, a separate order from the Department of Pension and Pensioners’ Welfare (DoPPW) permits the employee or their family to opt for OPS benefits. The last option exercised before death is deemed final, ensuring that families receive the full spectrum of OPS advantages without denial.
Key administrative provisions include the Central Civil Services (Implementation of National Pension System) Rules, 2021; the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021; and the CCS (Extraordinary Pension) Rules, 2023. Rule 10 specifically grants UPS employees the right to select between NPS and OPS in the event of disability or death.
Employees are required to submit Form 1 to exercise their opt‑in choice promptly after notification. This streamlined process ensures that all central government personnel are covered under the new benefits framework.