Unified Pension Scheme (UPS): Eligibility, Benefits, Returns, Gratuity, Withdrawal Rules & Application Process
Latest Update: The deadline for Central Government employees to exercise or switch to the UPS was 30th September 2025. Since this cut-off date has passed, Central Government employees and eligible retirees can no longer choose or switch to the Unified Pension Scheme.
The Unified Pension Scheme (UPS) is a government pension scheme for eligible Central Government employees covered under the National Pension System (NPS). It provides an assured monthly pension, minimum pension, family pension, inflation protection through Dearness Relief (DA), and retirement benefits, while requiring employee and government contributions during service.
Unified Pension Scheme Overview
| Particulars | Details |
| Scheme Name | Unified Pension Scheme (UPS) |
| Launch Date | 24 August 2024 |
| Notification Date | 24 January 2025 |
| Implementation Date | 1 April 2025 |
| Last Date to Switch from NPS to UPS | 30 September 2025 |
| Beneficiaries | Central Government employees, including newly joined and existing NPS subscribers |
| Employee Contribution | 10% of Basic Salary + Dearness Allowance (DA) |
| Employer Contribution | 18.5% of Basic Salary + Dearness Allowance (DA) |
| Minimum Service | 10 years for minimum pension and 25 years for full pension |
| Pension Amount |
|
| Gratuity | Eligible for retirement gratuity and death gratuity |
| Partial Withdrawal | Allowed after 3 years for specified reasons |
| Official Website | https://www.npscra.proteantech.in/ups.php |
What is the Unified Pension Scheme?
The Central Government introduced the Unified Pension Scheme (UPS) on 24th August 2024 for Central Government employees aiming to provide stability, dignity and financial security for government employees post-retirement, ensuring their well-being and a secure future.
Currently, government employees are covered under the National Pension System (NPS). These employees can continue with NPS or switch to the UPS scheme. However, once employees choose UPS, the decision is final and cannot be reversed.
The option to choose UPS had to be exercised within 30th September 2025. The scheme was implemented all over India from 1st April 2025 and 31,555 Central Government employees have already opted for UPS till 20th July 2025.
Timelines to Exercise or Switch to UPS
| Employee Category | Last Date to Switch/Choose UPS |
| Eligible existing employees as of 1 April 2025 or retired employees who retired on or before 31 March 2025 | 30 September 2025 |
| New recruits | Within 30 days of joining service |
Unified Pension Scheme Eligibility
- Existing Central Government Employee: An existing Central Government employee covered under the NPS and is in service as on 1st April 2025.
- Newly Joined Central Government Employees: A new recruit in the Central Government services, joining service on or after 1st April 2025.
- Retired NPS Subscribers: A Central Government employee who was covered under the NPS and who has superannuated, voluntarily retired or retired under the Fundamental Rules 56(j) on or before 31st March 2025.
- Spouse of Demised Employee: The legally wedded spouse of a retired or superannuated Central Government employee being a NPS subscriber and demised before exercising the option for UPS.
Who Are Not Eligible For UPS?
The following Central Government employees are not eligible for UPS:
- Employee superannuating or resigning before 10 years of service
- Employees removed from service
- Employees dismissed from service
UPS Scheme Minimum Pension Amount
The UPS guarantees a minimum pension of ₹10,000 per month for government employees who retire after completing at least 10 years of service.
Key Features of Unified Pension Scheme
- Assured Pension: Retired employees will receive a pension of 50% of their average basic pay over the previous 12 months before retirement. This benefit is given to employees with at least 25 years of service. Similar benefits are offered to employees with shorter service periods ranging from 10 to 25 years.
- Government Contribution: The government will contribute 18.5% of the employee’s basic salary to the pension fund. The employees will contribute 10% of their basic salary to the pension fund.
- Assured Family Pension: In case of the pensioner’s death, 60% of the pension immediately before the retiree’s demise will be given to their spouse.
- Assured Minimum Pension: Upon superannuation, an employee with at least 10 years of service will receive ₹10,000 monthly.
- Inflation Indexation: Inflation indexation will be provided on the assured, minimum, and family pensions. The Dearness Relief (DR) will be based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), similar to service employees.
- Lump Sum Payment: Retirees will receive a lump sum payment along with their gratuity at the time of superannuation. This payment will equal one-tenth of the monthly emoluments (pay + DA) as on the superannuation date for every six months of completed service. It will not reduce the amount of assured pension.
How to Apply for Unified Pension Scheme?
Eligible Central Government employees can apply for UPS either online or offline.
Online process
- Login to the CRA portal using your PRAN.
- Select the ‘Unified Pension Scheme’ option.
- Select ‘Migrate from NPS to UPS’ if you are existing member of NPS or ‘Register for UPS’ option if you are a newly recruited employee joining service after 1st April 2025.
- Fill out the required details and submit.
Offline process
- Visit the Protean website.
- Under ‘Forms under Unified Pension Scheme’, click on the relevant form to download it.
- Click on Form A1 if you are a newly recruited employee joining service after 1st April 2025.
- Click on Form A2 if you are existing member of NPS and want to exercise the option of UPS.
- Click on Form B1 if you are a NPS subscriber and retired on or after 1st April 2025.
- Click on Form B2 if you are have retired before 31st March 2025.
- Click on Form B5 if you are a spouse of a deceased retiree who has retired on or after 1st April 2025 but has not availed UPS.
- Click on Form B6 if you are a spouse of a deceased retiree who retired before 31st March 2025 without availing UPS.
- Fill out the form and submit it to the DDO (Drawing and Disbursing Officer).
- The DDO will check the details and forward it to the PAO (Pay and Accounts Officer) for final approval.
Documents Required to Exercise/ Switch for UPS
- PPO or service details (where applicable)
- Aadhaar
- PAN
- Bank account details
- Service records
- NPS account details
Gratuity Under Unified Pension Scheme
Under the Unified Pension Scheme, there are two types of gratuity:
- Retirement gratuity
- Death gratuity
Retirement Gratuity
Retirement gratuity is the lump-sum payment made by the employer to the employee upon retirement for serving the company for a specified time. It will be paid after a minimum of 5 years of service.
Central government employees are eligible for retirement gratuity under the following conditions:
- Superannuation and Invalidation: Retirement occurs when the employee reaches the age of 60 or the organisation's predetermined superannuation age. It also happens when the employee has retired under rule 56 of Fundamental Rules 1922 or rule 12 of the Central Civil Services (Implementation of National Pension System) Rules, 2021.
- Unique Voluntary Retirement Scheme (SVRS): This scheme lets government employees identified as surplus due to organisational changes opt for early retirement with specific benefits. It facilitates workforce optimisation while providing financial support to the retiring employees.
- Absorption into Other Services: The absorption of a government worker to a position in a government-owned or government-financed entity. Upon entry, the worker transfers from the previous government position to the new position, bringing over the service years and benefits, subjecting to some rules and regulations.
Calculation of Retirement Gratuity
Gratuity Amount = (1/4) × Emoluments × Completed Six-Monthly Periods of Service
- Emoluments = Basic Pay * Dearness Allowance
- Gratuity cannot exceed 16.5 times of the emoluments or 25 lakhs, whichever is lower
Death Gratuity
Death gratuity is a one-time lump sum payment made to provide financial support during a difficult time to the family/nominee of the deceased government employee, regardless of the tenure of their service. The death gratuity is payable if the government employee dies during the time of their service.
Calculation of Death Gratuity
The death gratuity of an employee is determined based on their service tenure.
| Tenure of Service | Death Gratuity |
| < 1 year | 2x emoluments |
| >= 1 year but < 5 years | 6x emoluments |
| >= 5 year but < 11 years | 12x emoluments |
| >= 11 year but < 20 years | 20x emoluments |
| > 20 years | Half of the emoluments for every six months of service |
UPS Withdrawal Rules and Conditions
The UPS withdrawals and computation of fixed payouts for Central Government employees are as follows:
- Complete Withdrawal on Retirement: Employees can withdraw up to 60% of their UPS corpus. This withdrawal will, however, reduce their regular pension payouts. In the event of the employee's death, the spouse receives 60% of the last pension paid for a lifetime. Dearness Relief is granted only to those who have started receiving their pensions.
- Partial Withdrawals: Employees can make partial withdrawals up to three times during their service, following a three-year lock-in period. Each withdrawal can be up to 25% of the employee's contributions and is allowed under specific circumstances, including:
- Purchasing or constructing a home (if the employee does not own one).
- Funding children's higher education or marriage.
- Covering medical expenses related to chronic illnesses or disabilities.
- Pursuing self-development or skill enhancement.
If an employee is too unwell to apply, a family member can initiate the withdrawal process. Employees can repay the amount to keep their pension benefits intact.
How is Pension Calculated Under the Unified Pension Scheme (UPS)?
| Type of Payout | Eligibility | Pension Amount |
| Full Assured Payout | At least 25 years of service | 50% of the average pay over the last 12 months before retirement |
| Proportional Payout | Less than 25 years of service | Calculated proportionally based on the years of qualifying service |
| Minimum Guaranteed Payout | At least 10 years of service | ₹10,000 per month |
For example: For example, a government employee retiring with ₹80,000 basic pay after 25 years will receive ₹40,000 monthly under UPS (50% of ₹80,000). However, under NPS, the monthly payout may vary between ₹25,000 -₹35,000, depending on corpus and annuity returns.
Use the UPS Calculator to estimate your pension payouts under the UPS scheme.
UPS Payment Process
- Payment Form: Eligible retired employees or eligible spouse of a deceased retiree must submit the appropriate claim form applicable to them (Form B1, B2, B3, B4, B5, B6) to the Head of office or DDO.
- Corpus Transfer: The individual UPS corpus is transferred to the pool corpus limited to the benchmark corpus value at retirement. The assured monthly payout is reduced if the corpus falls short of the benchmark, unless the subscriber adds to the shortfall. However, retirees before 31st March 2025 will receive payouts from the pool corpus without any transfer.
- Payout Order: The PAO will issue the payout order and forward it to the NPS trust. The payout order will includes all key details like final corpus, service history, pension amount and bank account information.
- Payment: Once the NPS trust approves the payout order, the UPS payments are released, including monthly pension, lump sum amount, final withdrawal amount up to 60%, Dearness Relief (DR) and any surplus corpus. The pension and DR will be credited every month to the subscriber’s bank account.
Tax Implications of Unified Pension Scheme
Tax on Contributions
Employee contributions of up to 10% of basic pay plus dearness allowance (DA) are eligible for deduction under Section 80CCD(1) of the Income Tax Act, 1961 (corresponding provisions apply under the Income Tax Act, 2025).
Employer contributions to the individual corpus are also eligible for deduction under Section 80CCD(2), subject to the prescribed limits.
Tax on Monthly Pension
The monthly pension received under the Unified Pension Scheme (UPS) is taxable under the head ‘Salaries’. In case of payouts in the nature of Family Pension received by the spouse of a deceased employee who was a subscriber to UPS, the pension is taxable under the head ‘Income from other sources’.
Tax on Lump Sum and Withdrawals
The UPS retirement lump-sum payment is fully exempt from income tax. In addition, withdrawal of up to 60% of the Individual Corpus or Benchmark Corpus (whichever is lower) at retirement is also tax-exempt.
However, the withdrawal is permitted only on retirement and results in a proportionate reduction in the assured monthly pension. The remaining 40% of the excess amount will be chargeable to tax.
Tax on Gratuity
Central Government employees covered under UPS continue to be eligible for retirement gratuity and death gratuity under the applicable service rules. The income-tax treatment of gratuity continues to apply under the relevant provisions of the Income Tax Act.
Benefits of Unified Pension Scheme
- Long-term financial security: UPS provides a regular monthly pension after retirement, ensuring a stable income and helping retirees maintain financial independence.
- Family pension benefit: In the event of the employee's death, the surviving spouse or eligible family members receive a family pension, providing continued financial support.
- Lump sum retirement benefit: Along with the monthly pension, UPS offers a lump sum payout at retirement, which can be used for major expenses or emergencies.
- Inflation protection: The assured pension is linked to inflation, helping retirees preserve their purchasing power and cope with rising living costs.
- Higher employer contribution: The employer contributes 18.5% of basic pay + dearness allowance (DA), helping build a larger retirement corpus than the National Pension System (NPS).
- Benefits for early retirees: Employees who retire after completing the prescribed qualifying service receive proportionate pension benefits, with a minimum assured pension of ₹10,000 per month after 10 years of qualifying service, subject to the UPS rules.
UPS vs NPS
The below table provides the differences between UPS and NPS:
| Particulars | UPS | NPS |
| Employer's contribution | Employers will contribute 18.5% of the basic salary to the pension fund. | Employers will contribute 14% of the basic salary to the pension fund. |
| Employees contribution | Employees will contribute 10% of the basic salary to the pension fund. | Employees will contribute 10% of the basic salary to the pension fund. |
| Pension amount | 50% of the average basic pay over the last 12 months before retirement for employees with 25 years of service. | NPS does not provide a guaranteed fixed pension amount. It depends on the returns on investments and the total accumulated corpus. |
| Family pension | In the case of the retiree’s death, 60% of the pension received immediately before the retiree’s demise will be provided to his/her family. | The family pension provided under the NPS depends on the accumulated corpus and the chosen annuity plan. |
| Minimum pension amount | ₹10,000 per month for employees retiring with at least 10 years of service. | The pension amount depends on the investments made in the market-linked investment schemes. |
| Lump sum amount | A lump sum amount is provided to employees upon superannuation, calculated as 1/10th of their last drawn monthly pay for every six months of completed service. | Employees can withdraw up to 60% of the NPS corpus as a lump sum upon superannuation. |
| Market exposure | There is partial market exposure since investments are made in government debt. | There is high market exposure since investments are made in a mix of equity and debt instruments. |
| Inflation protection | The UPS provides inflation protection, with pensions adjusted based on the AICPI-IW. | There is no provision in NPS for automatic DA increments for inflation protection. |
Unified Pension Scheme Rules
The Department of Pension and Pensioners’ Welfare has notified the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025. These rules regulate the service matters related to the Unified Pension Scheme benefits for Central Government employees opting for UPS option under the NPS.
These rules cover the following topics:
- Enrolment under UPS
- Switch form from UPS to NPS one year before the retirement date or 3 months before the VRS
- Contributions by employees and the Central Government
- Compensation to be paid to government servants where there is a delay in registration and credit of contributions to the NPS account
- Option for benefits under the UPS regulations or CCS (Pension) Rules in the event of disability or death of a government servant during service
- Benefits payable on retirement on premature retirement, superannuation, absorption in autonomous body or PSU, retirement on invalidation, voluntary retirement and resignation from service
- Effect of compulsory removal, retirement or dismissal from service
- Effect of departmental or judicial proceedings pending at the time of retirement
Impact of UPS on Government Workers
The Unified Pension Scheme has introduced significant changes for Central Government employees in respect of pension. It provides a stable and guaranteed income post-retirement as compared to the NPS. Under the UPS, employees will receive 50% of their average basic pay as pension upon retirement when they have 25 years of service.
However, even if an employee retires before 25 years but after serving 10 years of service, he/she will receive an assured amount of ₹10,000 per month as pension. Additionally, the employer makes an enhanced contribution under this scheme of 18.5% of the basic pay, enhancing the retirement corpus.
An employee will also receive gratuity upon retirement or death. Family pension is also provided for the spouse of a deceased employee, securing the future of the family. UPS addresses the uncertainties associated with market-linked schemes under the NPS by providing assured minimum pension amount, gratuity and family pension.
The UPS draws features from both the Old Pension Scheme (OPS) and the National Pension Scheme (NPS). UPS provides assured pensions, minimum pensions, and family pensions, providing security to retired employees. It also offers protection against inflation by adjusting the Dearness Relief (DR) of the employees, helping them maintain financial dignity post-retirement.
Related Articles:
1. UPS vs NPS vs OPS: Which is better for you?
2. Unified Pension Scheme(UPS) Calculator Online
3. SBI Amrit Vrishti Scheme
4. What is Commutation of Pension?
5. What is Restoration of Commuted Pension?
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