Unified Pension Scheme: Central government employees take note – UPS rules notified; check eligibility, contribution

The UPS operates as a contributory fund with each subscriber and government contributions. (AI picture)

Unified Pension Scheme (UPS) The PFRDA has issued a gazette notification, introducing complete tips for implementing the Unified Pension Scheme (UPS). Starting April 1, 2025, this scheme can be out there as a substitute for central government employees at present enrolled within the National Pension Scheme (NPS). Here is a radical rationalization addressing frequent questions on UPS:

UPS: Who is eligible?

According to the official notification, the next classes of central government employees qualify for UPS participation:
1. A present central government worker, i.e. one in service as of April 1, 2025, who’s already lined below NPS
2. New recruits in central government providers, on or after April 1, 2025. They are required to decide for a similar inside 30 days of becoming a member of.
3. A Central Government worker who was lined below NPS and who has superannuated or voluntarily retired or has retired below Fundamental Rules 56(j) (which isn’t handled as penalty below Central Civil Services (Classification, Control and Appeal) Rules, 1965), on or earlier than thirty first March 2025
4. The legally wedded partner in case of a subscriber who has superannuated or retired and has died earlier than exercising the choice for UPS.
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Opting for UPS? You can’t change your resolution!

Staff in classes 1 and three should determine about UPS enrolment inside three months from April 1, 2025. The collection of UPS, as soon as confirmed, turns into “final and irrevocable.”
The January 2025 notification says: “For the sake of clarity, it is made clear that any employee who has exercised the Unified Pension Scheme option under the National Pension System under this notification, shall not be entitled to and cannot claim any other policy concession, policy change, financial benefit, any parity with subsequent retirees, etc. later, including post-retirement.”
Upon completion of required documentation and PAO approval, subscribers will retain their earlier PRAN, now linked to UPS. These people may also keep a separate NPS account (Tier I and Tier II) voluntarily below the ‘All Citizen’ scheme.

UPS Contribution Requirements

The gazette specifies: “the monthly contribution of the UPS subscriber shall be ten percent of the basic pay (including non-practising allowance, where applicable) and dearness allowance thereon, which shall be credited to the individual PRAN of the UPS subscriber.”
The central government will present matching contributions to every subscriber’s PRAN.
Additionally, the Central Government will contribute roughly 8.5% of (fundamental pay + Dearness Allowance) for employees deciding on UPS. This helps assured funds below the UPS programme.
UPS subscribers should full ten years of qualifying service to obtain the minimal assured fee of Rs 10,000/month.
As said within the notification, “UPS Subscriber shall have the choice of default pattern of pension fund(s) and default investment.”
UPS subscribers can choose from PFRDA-registered pension funds. Without an lively choice, the default sample applies routinely. Participants have the pliability to switch their pension fund choice as soon as per monetary yr and funding preferences twice yearly.
For UPS subscribers who go for a non-default sample, these funding options can be found:
(i) Full funding allocation in Government securities (Scheme G)
(ii) Selection from these life cycle-primarily based schemes:
(A) Conservative Life Cycle Fund limiting fairness publicity to twenty-5 p.c
(B) Moderate Life Cycle Fund limiting fairness publicity to fifty p.c
According to an ET report, Rajesh Khandagale, Senior Vice President—NPS, Kfin, says, “Currently, UPS is applicable only for central government employees, and state governments have to decide on their own for implementation of the same. It is a good scheme and will be beneficial to the government employees. As private PFMs (pension fund managers) will also be part of the investment options, employees will have greater choices for their investments. However, annuity service providers will be adversely impacted as the Government has excluded them from the UPS ecosystem.”
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UPS: Possibility of diminished payout

Yes, your ultimate payout may be diminished upon retirement.
The UPS operates as a contributory fund with each subscriber and government contributions. If there’s a deficit in your particular person corpus in comparison with the benchmark corpus, “may be replenished by the UPS subscriber at any point in time before or on superannuation or voluntary retirement or retirement under Fundamental Rules 56(j) (which is not treated as a penalty under Central Civil Services (Classification, Control and Appeal) Rules, 1965), as may be applicable.”
Should you not deal with this shortfall, your retirement payout will see a proportional discount.
Furthermore, you or your legally wedded partner can decide to withdraw as much as 60% of both the person corpus or benchmark corpus (deciding on the decrease quantity) out there within the UPS-tagged PRAN on the time of superannuation or retirement.
According to the gazette notification, “Provided that in case the individual corpus is more than the benchmark corpus as on the date of superannuation or voluntary retirement or retirement, as may be applicable, the final withdrawal amount shall be calculated on the benchmark corpus and the excess amount in the individual corpus shall be credited to the designated bank account of the UPS Subscriber.”

How is assured payout calculated below UPS?

The calculation of assured payout below UPS is detailed within the Finance Ministry’s FAQs. “the rate of full assured payout will be at the rate of 50% of 12 monthly average basic pay, immediately before superannuation. A full assured payout is payable after a minimum of 25 years of qualifying service. In case of a lesser qualifying service period, a proportionate payout would be admissible. “
The Finance Ministry’s tips additionally specify that “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”
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