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Unified Pension Scheme (UPS): Eligibility, Benefits, Returns, Gratuity & Withdrawal Rules

Q: What are the key features of the Unified Pension Scheme (UPS)?

The key features of the UPS are as follows:Assured pension amount equal to 50% of the average basic pay over the previous 12 months before retirement for employees with at least 25 years of service. Assured family pension of 60% of the pension immediately before the retiree’s demise will be given to her/his spouse.Assured minimum pension of Rs. 10,000 per month for employees with at least 10 years of service upon superannuation.Retirees will receive a lump sum payment along with their gratuity at the time of superannuation.

By Mayashree Acharya

Updated on: Mar 25th, 2025

7 min read

Latest update: On 24 January 2025, the Finance Ministry notified the Unified Pension Scheme (UPS) as an option under the National Pension System (NPS) for Central Government employees. This scheme will be effective from 1st April 2025.

The Central Government introduced the Unified Pension Scheme (UPS) on 24th August 2024. The scheme will be implemented from 1st April 2025 and is expected to benefit 23 lakh Central Government employees. Find out about the newly introduced UPS scheme, its details, and its benefits.

What is Unified Pension Scheme?

The Central Government announced the Unified Pension Scheme (UPS) for 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.

State governments can also adopt and implement the UPS scheme for state government employees. Maharashtra is the first state to implement UPS. The Maharashtra cabinet decided to implement the scheme for state government employees on 25th August 2024. If all states adopt the UPS scheme, it would benefit over 90 lakh government employees covered under the NPS scheme across India.

Unified Pension Scheme Details

Scheme Name	Unified Pension Scheme (UPS)
Announced on	24th August 2024
Notified on	24th January 2025
Implementation Date	1st April 2025
Beneficiaries	Central Government employees
Employee Contribution	10% of basic salary + DA
Employer Contribution	18.5% of basic salary + DA
Benefits	Pension of 50% of the average basic pay over the last 12 months before retirement for employees having at least 25 years of service Rs. 10,000 per month upon superannuation after at least 10 years of service
Official Website Link	https://financialservices.gov.in/beta/en/ups

UPS Scheme Eligibility

An existing Central Government employee covered under the NPS and is in service as on 1st April 2025
A new recruit in the Central Government services, joining service on or after 1st April 2025
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
The legally wedded spouse of a retired or superannuated Central Government employee being a NPS subscriber and demised before exercising the option for UPS

UPS Scheme Minimum Pension Amount

The UPS guarantees a minimum pension of Rs. 10,000 per month for government employees who retire after completing at least 10 years of service.

UPS Scheme Benefits

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 Rs. 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.

UPS Scheme Returns

The UPS scheme provides an assured pension amount to government employees upon their retirement. Employers will contribute 18.5% of the basic salary + dearness allowance, while employees will contribute 10% of the basic salary + dearness allowance every month.

For employees who have retired after a minimum service of 25 years, 50% of their average basic pay drawn in the previous 12 months before retirement will be provided as a pension. For employees who have retired after a minimum service of 10 years, Rs. 10,000 per month is provided as a pension after retirement.

UPS Gratuity

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.

UPS Payout Calculation

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	Rs.10,000 per month

Use the UPS Calculator to estimate your pension payouts under the UPS scheme

Unified Pension Scheme vs NPS

The below table provides the differences between UPS and NPS:

Particulars	UPS	NPS
Employers 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.
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	Rs. 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.
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.

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.

Direct Link for Unified Pension Scheme Enrollment and Claim Forms

All central government employees can find the enrolment and claim forms online from April 1, 2025 on the official website of Protean CRA.

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Frequently Asked Questions

When will the UPS scheme come into effect?

The UPS scheme will come into effect from 1 April 2025.

What are the key features of the Unified Pension Scheme (UPS)?

The key features of the UPS are as follows:

Assured pension amount equal to 50% of the average basic pay over the previous 12 months before retirement for employees with at least 25 years of service.
Assured family pension of 60% of the pension immediately before the retiree’s demise will be given to her/his spouse.
Assured minimum pension of Rs. 10,000 per month for employees with at least 10 years of service upon superannuation.
Retirees will receive a lump sum payment along with their gratuity at the time of superannuation.

Which is better, NPS or UPS?

UPS provides a guaranteed pension amount, while the pension amount under NPS depends on the investments made in the market-linked security schemes. While UPS provides an assured pension, NPS may provide a higher pension amount due to higher returns in the market-linked investments. UPS may be better for employees who do not want to take any risk and get a guaranteed pension amount, while NPS may be better for employees who are willing to make market-based investments and get a higher return.

What is the difference between OPS and UPS pension?

The OPS provides a pension of 50% of the last drawn salary of employees, while UPS also provides a pension of 50% of the last drawn salary of employees but only for those employees who have completed 25 years of service.

Employees who retire with 10 to 25 years of service will get a proportionate amount as a pension under UPS. Employees do not have to contribute to the pension fund under OPS, but employees need to contribute 10% of their basic pay under UPS. Similarly, the government will also contribute 18.5% of the basic salary under UPS.

Is UPS scheme for private employees?

Currently, the UPS scheme is only for government employees. Thus, private employees are not covered under UPS.

Does UPS offer a lump sum pension?

Yes, retired employees will receive a lump sum payment along with their gratuity at the time of superannuation. This payment will be equal to one-tenth of the monthly emoluments (pay + DA) as on the superannuation date for every six months of completed service. However, it will not reduce the amount of assured pension.

Who is eligible for the UPS pension scheme?

Central Government employees currently enrolled in NPS are eligible to opt for the UPS if they are:

Existing Employees: Those serving as of March 31, 2025.
New Recruits: Employees joining on/after April 1, 2025, can choose between NPS and UPS.
Retirees: Employees who retired before March 31, 2025, can opt into UPS under certain conditions.
Spouses: Spouses of deceased employees covered under NPS and retired before March 31, 2025, can also opt into UPS so that their financial support is continued.

Can you opt out of Unified Pension Scheme?

Once an employee opts into the UPS, the decision is irrevocable. They cannot revert to the NPS or withdraw from the UPS. This policy is designed to maintain the integrity and sustainability of the pension system, ensuring that both the government and employees can plan for long-term financial commitments without the complexities that reversible decisions might introduce. Therefore, it is crucial to thoroughly evaluate the pros and cons before deciding on UPS or NPS.

Can I withdraw money from UPS before retirement?

UPS is a long-term retirement benefit scheme, focused on providing financial security after retirement . Employees can however make partial withdrawals up to three times during their service, following a 3-year lock-in period.

Each withdrawal can be up to 25% of the employee's contributions and is only allowed under specific circumstances, like home purchase, children's education/marriage, medical expenses, or skill development. Complete withdrawal before retirement isn't allowed.

What happens to UPS money if I resign?

If you resign before retirement under the UPS, you won't receive UPS benefits. Instead, your contributions will follow NPS rules. Your corpus remains in your NPS account, and if something happens to you, it will go to your nominee. The government's 18.5% contribution stops, and withdrawals are subject to NPS guidelines, meaning you can either withdraw the amount as per NPS rules or use it for an annuity.

Who is eligible for assured payouts under UPS?

Employees are eligible for an assured payout under UPS if they meet any of the following criteria:

Superannuation after completing at least 10 years of qualifying service.
Retirement under Fundamental Rule (FR) 56(j), a provision allowing the government to retire employees in the public interest after a certain age or service period, provided it is not imposed as a penalty.
Voluntary retirement after 25+ years of service, with payouts commencing from the original superannuation date.

What is the lock period of UPS?

UPS requires a minimum of 10 years of qualifying service to be eligible for assured payouts. Partial withdrawals may be permitted after a three-year lock-in period under specific conditions.

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About the Author

Mayashree Acharya

Senior Content Writer

I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

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