Unified Pension Scheme is to provide Central Government employees participating in the National Pension System with a comprehensive retirement plan. By opting for this scheme, employees gain access to a range of benefits tailored to support their financial security during retirement. The features of the scheme are specifically designed to enhance the pension provisions available to eligible individuals.
Key Features of the UPS are as follows:
- Assured Pension: 50 % of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. Proportionate for lesser service period up to a minimum of 10 years of service
- Assured Family Pension: @60% of pension of the employee immediately before her/his demise
- Assured Minimum Pension: @ 10000 per month on superannuation after minimum 10 years of service
- Inflation Indexation:
- On assured pension, on assured family pension and assured minimum pension.
- Dearness Relief based on All India Consumer Price Index for Industrial Workers (AICPI-IW) as in case of serving employees
- Benefits:
- Lump-Sum payment at superannuation in addition to gratuity
- 1/10th of monthly emolument (pay + DA) as on the date of superannuation for every completed six months of service
- This payment will not reduce the quantum of assured pension
Eligibility criteria under the Unified Pension Scheme (UPS)
Assured Payout shall be available only in the following cases, namely: –
(a) In case of an employee superannuating after qualifying service of ten years, from the date of superannuation.
(b) In case of the Government retiring an employee under the provisions of FR 56 (j) Rules, 1965 from the date of such retirement.
(c) In case of voluntary retirement after a minimum qualifying service period of 25 years, from the date such employee would have superannuated, if the service period had continued to superannuation.
Assured Payout shall not be available in case of removal or dismissal from service or resignation of the employee. In such cases, the Unified Pension Scheme option shall not apply.
Benefits under the Unified Pension Scheme (UPS)
1. Subject to other conditions stated in this notification, Assured Payout under the scheme shall be as follows, namely: –
(a) The rate of full assured payout will be @50% of twelve monthly average basic pay, immediately prior to superannuation. Full assured payout is payable after a minimum 25 years of qualifying service.
(b) In case of lesser qualifying service period, proportionate payout would be admissible;
(c) A minimum guaranteed payout of Rs. 10,000 per month shall be assured in case superannuation is after ten years or more of qualifying service; and
(d) In cases of voluntary retirement after a minimum 25 years of qualifying service, assured payout will commence from the date on which the employee would have superannuated, if he had continued in service.
2. In case of death of the payout holder after superannuation, family payout @60% of the payout admissible to the payout holder, immediately before his demise, will be assured to the legally wedded spouse (spouse legally wedded as on the date of superannuation or on the date of voluntary retirement or retirement under FR 56(j), as may be applicable).
3. Dearness Relief will be available on the assured payout and family payout, as the case may be. The
Dearness Relief will be worked out in the same manner as Dearness Allowance applicable to serving
employees. Dearness Relief will be payable only when payout commences.
4. A lump sum payment will be allowed on superannuation @10% of monthly emoluments (basic pay +Dearness Allowance) for every completed six months of qualifying service. This lump sum payment will not affect the quantum of assured payout.
5. The corpus under the Unified Pension Scheme option will comprise of two funds, namely:-
(a) An individual corpus with employee contribution and matching Central Government
contribution.
(b) A pool corpus with additional Central Government contribution.
6. The contribution of employees will be 10% of (basic pay + Dearness Allowance). The matching Central Government contribution will also be 10% of (basic pay + Dearness Allowance). Both will be credited to each employee’s individual corpus.
7. Central Government shall provide an additional contribution of an estimated 8.5% of (basic pay +Dearness Allowance) of all employees who have chosen the Unified Pension Scheme option, to the pool corpus on an aggregate basis. The additional contribution is for supporting assured payouts under the Unified Pension Scheme option.
8. The employee can exercise investment choices for the individual corpus alone. Such investment choices shall be regulated by the Pension Fund Regulatory and Development Authority. A ‘default pattern’ of investment may be defined by Pension Fund Regulatory and Development Authority from time to time. If an employee does not exercise an investment choice on individual corpus, the ‘default pattern’ of investment will apply.
9. The investment decisions for the pool corpus built through the additional Central Government contribution will solely rest with Central Government.
10 In respect of employees who have retired before the date of operation of Unified Pension Scheme and who opt for the Unified Pension Scheme option, Pension Fund Regulatory and Development Authority will determine the mechanism for making available the top- up amount.
Conditions for choosing of Unified Pension Scheme
1. The existing Central Government Employees under National Pension System, on the effective date of operationalisation of the Unified Pension Scheme option, as well as the future employees of Central Government can choose to either take the Unified Pension Scheme option under the National Pension System or continue with the National Pension System without the Unified Pension Scheme option. In case an employee chooses the Unified Pension Scheme option, all its stipulations and conditions shall be deemed to have been opted for and such option once exercised, shall be final.
2. Once an employee covered under National Pension System, who is in service on the effective date of operationalisation of the Unified Pension Scheme option, exercises the Unified Pension Scheme option, the outstanding National Pension System corpus in the employees Permanent Retirement Account Number shall be transferred to the employee’s individual corpus under the Unified Pension Scheme.
3. For each employee covered under National Pension System who has exercised the Unified Pension Scheme option, a ‘benchmark corpus’ value shall be computed, in such manner as may be determined by the Pension Fund Regulatory and Development Authority, with the following assumptions, namely: –
(i) regular receipt of applicable contributions for both the employees and the employer for each month of qualifying service;
(ii) in case of missing contributions, an appropriate value, to be determined by the Pension Fund Regulatory and Development Authority, shall be assigned.
(iii) investment of such contributions is made as per the ‘default pattern’ of investment, as defined by the Pension Fund Regulatory and Development Authority.
4. The value or units in the individual corpus with investment choices of the employee shall be informed to such employee on a periodic basis. Alongside, the value or units of the benchmark corpus corresponding to the employee, computed as per para 5 above will also be informed to the employee.
5. At superannuation or retirement, the qualifying service of the employee under the Unified Pension Scheme option, will be determined by the Head of Office, where he is employed.
6. At superannuation or retirement, the employee under Unified Pension Scheme shall authorise transfer of the value or units in the individual corpus to the pool corpus, equivalent to the value or units of the benchmark corpus for authorisation of Assured Payout. In case the value or units of individual corpus is less than value or units of the benchmark corpus, the employee will have an option to arrange for additional contribution to meet this gap. In case the value or units of individual corpus is more than the value or units of the benchmark corpus, the employee shall authorise transfer of value or units equivalent to the benchmark corpus and the balance
amount in the individual corpus will be credited to the employee.
7. In case the values or units transferred by the employee from the individual corpus to the pool corpus, is less than the value or units of the benchmark corpus, payout proportionate to the assured payout shall be authorised.
8. The Unified Pension Scheme, being a ‘fund-based’ pension system, relies on the regular and timely accumulation and investment of applicable contributions (from both the employee and the employer) for Assured Payout to the employees.
9. For the sake of clarity, it is made clear that any employee who has exercised the Unified Pension Scheme option under National Pension System under this notification, shall not be entitled for and cannot claim, any other policy concession, policy change, financial benefit, any parity with subsequent retirees etc. later including postretirement.
10.The provisions of Unified Pension Scheme will also be applicable, mutatis mutandis to past retirees of National Pension System, who have superannuated before the date of operationalising of Unified Pension Scheme. Such superannuated employees will be paid arrears for the past period along with interest as per Public Provident Fund rates. The monthly top-up amount for such superannuated employees, to be determined by the Pension the withdrawals made by, and annuities paid to, them.
Regulator of Unified Pension Scheme
The Unified Pension Scheme (UPS) offers a structured approach to monthly assured payouts based on specified parameters. Under the scheme, individuals meeting necessary criteria may benefit from a reliable pension income post-retirement. The Pension Fund Regulatory and Development Authority plays a key role in establishing guidelines to govern the effective implementation of the Unified Pension Scheme.
Implementation date of Unified Pension Scheme
The effective date for operationalisation of the Unified Pension Scheme shall be 1st April, 2025
Examples of Admissible Monthly Assured Payout under Unified Pension Scheme
A set of different scenarios have been considered with the following set of assumptions, namely:-
(i) The 12 monthly average basic pay before superannuation of an employee is Rs 45,000 (denoted as P).
(ii) The employee has a qualifying service (based on the number of months of contribution) of 25 years (300 months) or more (denoted as Q).
(iii) All contributions of the employee have been credited regularly and there are no missing credits.
(iv) The employee has opted for ‘default pattern’ of investment.
(v) The employee did not make any partial withdrawals
Lump Sum Payout on Superannuation
Frequently Asked Questions (FAQs) on the Unified Pension Scheme (UPS)
- What is the Unified Pension Scheme (UPS)?
The Unified Pension Scheme (UPS) has been introduced as an option under the
National Pension System (NPS) by the Central Government for the Central
Government employees covered under NPS so that they may receive an assured
payout after their retirement. It is a ‘fund-based’ payout system which relies on the
regular and timely accumulation and investment of applicable contributions (from
both the employee and the employer (the Central Government)) for grant of
monthly payout to the retiree. - When will Unified Pension Scheme (UPS) become operational?
The Unified Pension Scheme will be operational from 1st April, 2025. - Who is eligible for the UPS?
The Central Government employees, who are covered under NPS, are eligible to
submit their option for UPS under National Pension System. - How is the assured payout calculated under UPS?
The rate of full assured payout will be @50% of 12 monthly average basic pay,
immediately prior to superannuation. Full assured payout is payable after a
minimum 25 years of qualifying service. In the case of a lesser qualifying service period,
proportionate payout would be admissible. A minimum guaranteed payout of Rs
10,000 per month shall be assured in case superannuation is after 10 years or
more of qualifying service subject to timely and regular credit of contributions and
no withdrawals. In cases of voluntary retirement after a minimum 25 years of
qualifying service, assured payout will commence from the date on which the
employee would have superannuated if he had continued in service. - What is the minimum assured-payout under UPS?
A minimum assured payout of Rs.10,000 per month has been guaranteed under
Unified Pension Scheme in case superannuation is after 10 years or more of
qualifying service, subject to timely and regular credit of contributions and no
withdrawals. - What is the family payout under UPS?
In case of death of the payout holder after superannuation, family payout @60% of
the payout admissible to the payout holder immediately before his demise, shall be
assured to the legally wedded spouse (spouse legally wedded as on the date of
superannuation or on the date of voluntary retirement or retirement under FR 56(j),
as may be applicable
