Maximum Gratuity under UPS: Unified Pension Scheme subscribers to get up to ₹25 lakh; here's how

The Unified Pension Scheme (UPS) will become available as an option for Central Government employees covered under the National Pension System (NPS) from April 1, 2025.

UPS will provide not only an assured pension and lump sum but also gratuity on retirement as per the rules currently applicable to Central Government employees covered under NPS.

According to the Finance Ministry, the gratuity will be paid to UPS subscribers according to 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.

Gratuity calculation

An employee is eligible for two types of gratuities - retirement gratuity and death gratuity.

Retirement gratuity is calculated by adding one-fourth of emoluments (basic pay+dearness allowance) for each completed six-month period of qualifying services, subject to a maximum of 16½ times the emoluments or ₹25 lakh, whichever is lower.

The maximum amount of gratuity paid to an employee cannot exceed ₹25 lakh. Please note that ₹25 lakh is the maximum limit for payment of gratuity to an employee. However, the actual gratuity amount may differ from one employee to another depending on their total service period and pay level.

Retirement gratuity is payable after a minimum of 5 years of qualifying service and retirement under the following conditions:

• Retirement on attaining the age of superannuation, or on invalidation

• Retirement under rule 56 of Fundamental Rules 1922 or rule 12 of the Central Civil Services (Implementation of National Pension System) Rules, 2021

• Retirement under the special voluntary retirement scheme after being declared surplus to the establishment

• Absorbed in a service or a post in or under a corporation or company wholly or partially owned/financed by the government

The death gratuity is payable if the government servant dies while in service as follows:

₹25 lakh gratuity limit set in 2024

"...as per the Government's decisions in implementation of the recommendations of the Seventh CPC, the maximum limit of Retirement Gratuity and Death Gratuity under the Central Civil Services (Pension) Rules, 2021 or the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, woul dbe increased by 25% i.e. from ₹20 lakh to ₹25 lakh, with effect from January 2024," DoPPW said in an office memorandum dated May 30, 2025.