Big clarification on gratuity under UPS: Just like NPS, Unified Pension Scheme also offers gratuity

The Union Ministry of Personnel, Public Grievances & Pensions has clarified that Central Government employees opting for the Unified Pension Scheme (UPS) will be eligible for 'Retirement gratuity and Death gratuity" as provided currently to Central Government NPS subscribers.

UPS is currently available as an option under the National Pension System (NPS) for Central Government employees. The UPS scheme provides employees with assured pension and retirement benefits upon retirement.

Eligible Central Government employees can make a one-time switch from NPS to UPS by June 30.

The clarification on gratuity payment under UPS has come as a huge relief for employees, as there were many rumours circulating on social media.

"Ministry of Finance, Department of Financial Service vide its Notification No. FS-1/3/2023-PR dated 24.01.2025 had notified introduction of the Unified Pension Scheme (UPS) as an option under NPS for the recruits to the Central Government civil service w.e.f. 01.04.2025 giving one time option to the Central Government employees covered under the National Pension System (NPS) for inclusion under the Unified Pension Scheme," the Ministry of Personnel, Public Grievances & Pensions said in a statement on June 18, 2025.

"In view of the above, the Department of Pension and Pensioners’ Welfare vide its OM No. 57/01/2025-P&PW(B)/UPS/10498 dated 18.06.2025, has issued clarification that the Central Government employees opting for Unified Pension Scheme shall be eligible for benefit of ‘Retirement gratuity and Death gratuity’ under the provisions of the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021," it added.

Earlier in March, the Finance Ministry had told the Rajya Sabha that gratuity will be available under UPS as per the provisions of the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021.

"UPS being an option under NPS, gratuity is payable in terms of Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, notified by the Department of Pensions and Pensioners’ Welfare," Pankaj Chaudhary, Union Minister of State for Finance, recently said in a written reply to a query in the Rajya Sabha.

Option to avail OPS benefits

The Government has also issued instructions extending the option to Central Government civil employees covered under Unified Pension Scheme (UPS) for availing benefits of the Old Pension Scheme under the CCS(Pension) Rules, 2021 or the CCS(Extraordinary Pension ) Rules, 2023 in the event of death of Government employees or his discharge from service on account of invalidation or disablement.

"Central Government employees opting for UPS would have to exercise the option in the prescribed form attached with the Office Memorandum to his Ministry / Department for availing the benefits of OPS in the case of aforesaid events," DoPPW said.