Unified Pension Scheme Employees Now Eligible for Retirement, Death Gratuity: What It Means

In a landmark decision, the Government of India has extended retirement and death gratuity benefits to employees covered under the Unified Pension Scheme (UPS). This move brings these benefits in line with the provisions of the Old Pension Scheme (OPS), addressing a longstanding demand of lakhs of government employees and ensuring greater social security under the National Pension System (NPS).

What Is the Unified Pension Scheme (UPS)?

The Unified Pension Scheme is an option under the National Pension System (NPS) that was introduced to streamline retirement benefits while offering flexibility and portability. Notified by the Finance Ministry on January 24, 2025, it officially comes into effect from April 1, 2025, and offers a one-time option for inclusion to existing and new central government employees.

Retirement and Death Gratuity: What’s New?

According to Union Minister Dr. Jitendra Singh, all employees under UPS are now entitled to retirement and death gratuity as per the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021. This means that even UPS-covered employees are now eligible for gratuity benefits of up to ₹25 lakh, just like their OPS counterparts.

These benefits will be available:

• In case of retirement

• In the event of death during service

• In cases of invalidation or disability

Old Pension Scheme Option in Case of Death or Disability

A separate order by the Department of Pension and Pensioners’ Welfare (DoPPW) states that in case a government employee dies in service or is discharged due to disability or invalidation, they or their family can opt for OPS benefits. However, the last option exercised by the deceased employee before death shall be treated as final.

This progressive move ensures that:

• Families of deceased employees cannot be denied enhanced OPS benefits

• Employees with disability or invalidation can receive greater post-service support

Reactions and Impact

Manjeet Singh Patel, President of the All India NPS Employees Federation, hailed the reform as “historic and much-needed.” He said it removes major misconceptions and will prompt more employees to choose the Unified Pension Scheme over the regular NPS.

DoPPW Secretary V. Srinivas also emphasized that the reform brings parity between pension schemes and reflects the government’s focus on human-centric administration.

Legal and Administrative Framework

The reform is rooted in the following rules and notifications:

• Central Civil Services (Implementation of National Pension System) Rules, 2021

• Central Civil Services (Payment of Gratuity under NPS) Rules, 2021

• CCS (Extraordinary Pension) Rules, 2023

Under Rule 10, every UPS-covered employee has the right to choose between NPS and OPS in case of disability or death in service.

Instructions for Employees

• New recruits (post-April 1, 2025): Must choose between UPS/OPS benefits at the time of joining.

• Existing employees under NPS: Can opt for UPS and then select gratuity/OPS benefits as applicable.

• The option must be exercised using Form 1 and submitted promptly after notification.

Key Highlights:

• UPS employees now eligible for ₹25 lakh gratuity.

• Option to switch to OPS in case of death or disability.

• Reform brings NPS and UPS at par in key benefit areas.

• Applies to all central government employees covered under NPS.