Gratuity confirmed on switch from NPS to UPS before June 30; Know how much you can get

The Department of Pension and Pensioners' Welfare (DoPPW) has officially confirmed that employees switching from NPS to UPS will continue to get retirement gratuity and death gratuity.

The DoPPW's clarification came after there were speculations that employees switching from NPS to UPS may be deprived of the gratuity benefit.

June 30 is the last date to switch from the National Pension System (NPS), which offers market-linked returns on funds accumulated for pension, to the Unified Pension Scheme (UPS), which will provide an assured pension to employees on retirement.

UPS is available as a one-time option only for employees currently enrolled in NPS for their pension savings. Meaning, Central Government employees can switch from NPS to UPS only once. They will not be able to switch back to NPS after opting for UPS.

How much gratuity will be paid under UPS?

In March 2025, the Finance Ministry had said in the Parliament that gratuity will be paid to UPS subscribers according to the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021.

In its recent office memorandum, the DoPPW has only clarified that UPS subscribers will continue to get gratuity benefits on death or retirement. However, it has not said anything new about the amount of gratuity. Therefore, it means the gratuity amount would work out to be the same as in NPS.

OPS benefit allowed on death, disablement

"UPS has been notified as an option under the NPS. Therefore, it has been decided that the Central Government civil employees who opt for UPS under NPS shall also be eligible for option for availing benefits under UPS or the CCS (Pension) Rules, 2021 or the CSS (Extraordinary Pension) Rules, 2023 in the event of death of the Government servant during service or his discharge on the ground of invalidation or disablement," DoPPW said.

For the above, DoPPW said that every Central Government servant covered who opts for UPS under NPS shall, at the time of joining Government service, exercise an option in Form 1 for availing benefits under the UPS or under the CCS (Pension) Rules, 2021 or the CCS (Extraordinary Pension) Rules, 2023 in the event of his/her death or boarding out on account of disablement or retirement on invalidation.

Existing Government servants, who have opted for the UPS under NPS shall also exercise such option as soon as possible.