Central government employees enrolled in the Unified Pension Scheme (UPS) will now receive retirement and death gratuity benefits akin to those provided under the Old Pension Scheme (OPS). This decision, announced on Wednesday by Union Minister Jitendra Singh, addresses a long-standing demand from government employees and aims to establish parity in retirement benefits across different pension systems.

The UPS, effective from April 1, 2025, was introduced as an alternative to the existing National Pension System (NPS) for central government employees. The scheme is designed to provide financial security, stability, and dignity to government employees post-retirement. Under the UPS, employees with a minimum of 25 years of service will receive a pension amount equal to 50% of their average basic pay over the last 12 months before retirement. Employees with at least 10 years of service are guaranteed a minimum monthly pension of ₹10,000 upon superannuation. In the event of the pensioner's death, the family will receive 60% of the pension amount.

With the latest announcement, UPS-covered employees are now eligible for gratuity benefits up to ₹25 lakh, similar to their OPS counterparts. These benefits will be available in cases of retirement, death during service, or invalidation or disability. The Department of Pension and Pensioners' Welfare (DoPPW) has issued an order clarifying that central government employees under the UPS will also be eligible for retirement and death gratuity benefits under the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021.

Furthermore, a separate order by the DoPPW provides an option for employees to revert to the OPS in case of death during service. This provision is seen as progressive and addresses clarifications sought by employees. Manjeet Singh Patel, President of the All India NPS Employees Federation, has welcomed the order, calling it a historic and much-needed move by the government. He believes that the inclusion of death-cum-retirement gratuity in UPS will eliminate uncertainties among employees and that many will now opt for the UPS.

Under the UPS, employees contribute 10% of their basic pay and dearness allowance, while the government contributes 18.5%. Of the government's contribution, 8.5% will go into a separate fund to meet any shortfalls in commitments, offering both a guaranteed pension and the possibility of higher returns.

Employees who joined government service after January 1, 2004, can opt for the UPS, which offers assured pension benefits, making it a potentially better alternative to the NPS. The UPS ensures a guaranteed, inflation-linked pension, while the NPS offers the potential for a larger corpus. Existing employees under the NPS can switch to the UPS, ensuring broader pension coverage. New recruits joining after April 1, 2025, must choose between UPS and OPS benefits at the time of joining. Existing employees under the NPS can opt for the UPS and then select gratuity or OPS benefits as applicable, using Form 1 to exercise their option promptly after notification.

The introduction of the UPS and the extension of OPS-like benefits mark a significant step towards ensuring social security and parity in retirement benefits for central government employees.