Unified pension scheme (UPS)retirement, UPS gazette notification , Advantage of UPS.

 

UPS Introduction

The Unified Pension Scheme (UPS) is a pension scheme introduced by the Government of India, effective 1st April 2025, as an option under the National Pension System (NPS) for Central Government employees. It is to provide assured and adequate retirement benefits.

UPS Eligibility

• Existing Central Government Employees.
•  under NPS employees .
• New Recruits joining Central Government service on or after 01.04.2025.
• Retired NPS Subscribers who superannuated or retired on or before 31.03.2025, provided.

Cut off date  for Option :

• Existing employees/retirees: By 30th September 2025.
• New recruits: Within 30 days of joining.

Highlights of UPS(Key features)

Contribution Structure

• Employee Contribution: 10% of Basic Pay + Dearness Allowance (DA) same as NPS
• Government Contribution: 18.5 of basic pay(8.5 Additional) +DA

• Investment Options

  • Default Pattern (auto-assigned if no choice made).
  • 100% Government Securities (Scheme G)
  • Change Frequency: Pension Fund: Once per financial year.
  • Investment Pattern: Twice per financial year.

  Benefits under UPS

  • Assured Payout, at the rate of 50% of last 12 monthly average basic pay, immediately prior to superannuation. Assured payout is payable after a minimum 25 years of qualifying service. In case of lesser qualifying service period, proportionate payout would be admissible.
  • Minimum Guaranteed Payout: ₹10,000/month (after 10 years of service).Proportionate payout: Between 10 and 25 years of service 
  • Final Withdrawal: Up to 60% of IC or BC, whichever is lower. Reduces assured payout proportionately. Option to replenish shortfall to restore full payout.
  • Lump Sum Payment: ₹(1/10) × (Basic Pay + DA) for every completed 6 months of qualifying service. Payable on superannuation, voluntary retirement, or retirement under FR 56(j).
  • Family Payout:
  • 60% of subscriber’s admissible payout to legally wedded spouse as on date of retirement.
  • Dearness Relief: Payable on both admissible payout and family payout, as notified by the Government.
  • Gratuity Benefits: Retirement Gratuity and Death Gratuity are extended to UPS subscribers under the CCS (Payment of Gratuity under NPS) Rules, 2021.
  • Tax Treatment As per the CBDT Office Memorandum dated 02.07.2025, the following provisions of the Income Tax Act, 1961 apply to UPS:
  • Section 80CCD(1), 80CCD(1B), 80CCD(2), 80CCD(3), 80CCD(4) – Deductions for contributions.
  • Section 10(12A), 10(12B) – Exemptions on withdrawals and annuities.
  • These provisions apply mutatis mutandis to UPS, subject to prescribed limits. Any deviation in payout or contribution structure would require legislative amendment      

  • Partial Withdrawals
  • Up to 25% of self-contribution (excluding returns).
  • Allowed 3 times (including NPS withdrawals).
  • For specific purposes: education, marriage, housing, medical, disability, skill development.
  • Pros of UPS
  • Guaranteed pension amount based on last 12 months' salary.
  • Higher government contribution (8.5%) compared to NPS (14%)
  • Family pension provision ensures financial security for dependents.
  • Inflation-linked adjustments protect purchasing power.
  • Gratuity benefits included.
  • Cons of UPS
  • No lump sum payout at retirement
  • Taxation details unclear at this stage
  • It may not provide financial flexibility compared to NPS

  • For gazette notification 

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