Unified Pension Scheme Update: Retirement and Death Gratuity Extended to Central Government Employees

Employees under the Unified Pension Scheme (UPS) have received a major boost with the government's recent decision to extend retirement and death gratuity benefits previously available only under the Old Pension Scheme (OPS). This addresses a long-standing concern among central government employees and brings their pension entitlements on par with those of OPS beneficiaries.

UPS Employees to Receive Gratuity Benefits

In a landmark development, all central government employees enrolled under the Unified Pension Scheme will now be eligible for retirement and death gratuity. This move aligns their entitlements with those offered under the Old Pension Scheme, removing a major disparity that existed between the two systems.

Government Acknowledges Demand for Parity

Union Minister Jitendra Singh stated that the change fulfils a long-pending demand from employees for parity in retirement benefits. By allowing gratuity benefits under UPS, the government has shown its intent to provide equal financial protection to all staff, regardless of the pension system they are part of.

Clear Guidelines Issued Through Formal Notification

The Department of Pension and Pensioners’ Welfare (DoPPW) has issued a notification clarifying the rules. The order allows government servants to opt for UPS while retaining eligibility for benefits under the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021. These provisions apply in the case of death during service or discharge due to invalidation or disability.

Inclusion of ₹25 Lakh Gratuity Boosts Employee Confidence

As per DoPPW Secretary V Srinivas, UPS employees are now entitled to a retirement and death gratuity of up to ₹25 lakh. This clarification removes uncertainty among employees and ensures that those who have opted for UPS do not face disadvantages in terms of post-retirement security.

Employee Bodies Welcome the Decision

The decision has been widely appreciated by government staff and employee federations. The All India NPS Employees Federation described the development as historic. According to its president, Manjeet Singh Patel, the move will reduce confusion and encourage more employees to opt for UPS confidently.

Pension Option to Be Final at Time of Death

A key point in the order is that the last pension option chosen by a government servant before their death will be treated as final. Family members will not be allowed to change this choice after the employee's demise. This clause adds certainty to pension disbursement.

New Employees Must Choose at Time of Joining

Employees who join the central government on or after April 1, 2025, must select their pension benefits through Form 1 at the time of joining. They can opt for UPS or other schemes such as the CCS (Pension) Rules, 2021 or the CCS (Extraordinary Pension) Rules, 2023. This ensures clarity in benefit entitlement from the beginning of service.

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Existing Employees to Submit Their Options

Those already working under the National Pension System and who have opted for UPS are also required to exercise their option as soon as possible. This step is crucial to avoid ambiguity regarding pension entitlement in the event of disability or death during service.

UPS Notified as Official Pension Option

The Ministry of Finance had earlier issued a notification declaring UPS as an option under the National Pension System for recruits joining from April 2025. This gives employees a one-time opportunity to transition into a pension structure that now includes gratuity benefits.

Conclusion 

With the inclusion of gratuity and streamlined option rules, the government has taken a meaningful step in strengthening social security for its workforce. By aligning UPS with OPS, it aims to ensure fair treatment and financial stability for all categories of central government employees.

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