Unified Pension Scheme (UPS) under NPS from FY 2025-26: Benefits include gratuity, lump sum, assured pension

The brand new Unified Pension Scheme (UPS) will be implemented for central government employees from the start of the new financial year (FY) 2025-26 on April 1, 2025.

To be managed by the Pension Fund Regulatory and Development Authority (PFRDA), UPS will be available as an option under the National Pension System (NPS).

The government has introduced UPS under NPS to provide an option of assured monthly pension, lump sum, and gratuity after retirement to central government employees.

UPS is different from existing pension schemes as it combines the defined contribution with defined benefit to offer an assured payout.

"It is different from existing pension schemes as it contains the element of defined contribution with defined benefit in the form of assured payout which safeguards the employees from the uncertainty of market-linked returns and ensures maintenance of fiscal prudence as well as inter-citizen and inter-generational equity," Pankaj Chaudhary, minister of state for finance, said in a written reply to a query in the Lok Sabha on April 17, 2025.

Top features of UPS

The Unified Pension Scheme packs several benefits for central government employees, who may opt for it. Here's a look:

Assured monthly pension at the rate of 50% of the average basic pay drawn over the last 12 months before superannuation for a minimum qualifying service of 25 years. The assured payout will be proportionate for a lesser service period up to a minimum of 10 years of service.

UPS will offer a lump sum payment at superannuation in addition to gratuity at the rate of 1/10th of monthly emoluments (pay+DA) as on the date of superannuation for every completed six months of service. The lump sum payment will not reduce the quantum of assured payout.

UPS will also offer an assured family pension at the rate of 60% of the pension admissible to the employee immediately before his/her demise to the surviving spouse.

The scheme guarantees a minimum payout of ₹10,000 per month on superannuation after a minimum qualifying service of 10 years.

The assured pension, gratuity, and lump sum under UPS will be available to central government employees who are currently covered under NPS and opt for the UPS.