Unified Pension Scheme
Unified Pension Scheme
The Unified Pension Scheme (UPS) has been introduced under the National Pension System (NPS) for Central Government employees, effective from 1 April 2025. This scheme aims to provide a guaranteed, inflation-linked pension after retirement, ensuring long-term financial security. UPS is a hybrid pension model, combining the benefits of defined benefit pension and defined contribution pension, offering an assured monthly pension while maintaining fiscal sustainability for the government.
Eligibility
- Existing Central Government Employees under NPS as on 01.04.2025.
- 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:
- Minimum 10 years of qualifying service
- Retirement under FR 56(j) (not as a penalty)
- Legally wedded spouse as on date of retirement, in case of subscriber’s demise
Timelines for exercising the UPS Option:
- Existing employees (as on 01.04.2025) / retirees (up to 31.03.2025): Option must be exercised by 30th November 2025, or within such extended timelines if any, allowed by the Central Government
- New recruits: Within 30 days of joining
Features of UPS
- Employee Contribution: 10% of Basic Pay + Dearness Allowance (DA)
- Government Contribution: Matching 10% (from payroll system)
- Additional Government Contribution: An estimated 8.5% of Basic Pay + DA to a Pool Corpus
- Individual Corpus (IC): Accumulated contributions of employee and matching government share
- Benchmark Corpus (BC): Notional corpus computed using default investment pattern, regular and timely contributions and without any partial withdrawal & voluntary corpus
- Default Pattern (auto-assigned if no choice made)
- Active Choice 100% Government Securities (Scheme G)
- Life Cycle Funds
- Auto choice - Life Cycle 25 – Low (5E/55Y): Equity allocation 25% upto 35 years of age, falling to 5% at 55+ years
- Auto choice - Life Cycle 50 – Moderate (10E/55Y): Equity allocation 50% upto 35 years of age, falling to 10% at 55+ years
- Auto choice - Life Cycle 75 – High (15E/55Y): Equity allocation 75% upto 35 years of age, falling to 15% at 55+ years
- Auto choice - Life Cycle – Aggressive (35E/55Y): Equity allocation 50% upto 45 years of age, falling to 35% at 55+ years
- Change Frequency
- Pension Fund: Once per Financial Year
- Investment Pattern: Twice per Financial Year
- Life Cycle 75 – High (15E/55Y) (Equity allocation 50% upto 35 years of age, falling to 15% at 55+)
- Up to 25% of self-contribution (excluding returns).
- Allowed 3 times (including NPS withdrawals).
- For specific purposes: education, marriage, housing, medical, disability, skill development
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) × (Last Drawn Basic Pay + DA) for every completed 6 months of qualifying service. Payable on superannuation, voluntary retirement, or retirement under FR 56(j).
Family Payout
The legally wedded spouse shall receive 60% of admissible payout drawn by the subscriber immediately prior to the demise.
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.
Operational Process
Enrolment
- Form A1: For new recruits
- Form A2: For existing NPS subscribers opting for UPS
Claim Forms
- B1–B6: Depending on subscriber status and whether benefits were availed
UPS Payout Order (UPO)
- Issued by PAO.
- Includes details of subscriber, spouse, corpus values, payouts, and bank details.
- Sent to NPS Trust for benefit release.
Offline Process
| CATEGORY OF CENTRAL GOVERNMENT EMPLOYEE | TO EXERCISE UPS OPTION | UPS CLAIM AND PAYOUT FORM | ||
|---|---|---|---|---|
| To be submitted by subscriber | To be submitted by spouse of deceased subscriber who availed UPS benefits | To be submitted by spouse of deceased subscriber who did not avail UPS benefits | ||
| Recruited to service on or after 01st April 2025 | A1 | B1 | B3 | B5 |
| Employees, currently in service and are under NPS | A2 | B1 | B3 | B5 |
| Employees retired / voluntarily retired / Rule 56 (j) on or before 31st March 2025, under NPS | - | B2 | B4 | B6 |
How to opt for UPS?
For more details or to arrange a session on UPS or NPS in your office, please get in touch with us at +91 73044 00044
or write to nps@sbipensionfunds.co.in
Comparative Overview: NPS vs. UPS
| Parameter | NPS | UPS |
|---|---|---|
| Contribution | 10% (employee) + 14% (Govt.) | 10% (employee) + 10% (Govt.) + 8.5% (Pool Corpus) |
| Assured Payout | No | Yes (subject to conditions) |
| Minimum Pension | No | ₹10,000/month |
| Dearness Relief | No | Yes |
| Final Withdrawal | Up to 60% | Up to 60% |
| Family Benefits | Depends on annuity | 60% of subscriber’s payout |
| Partial Withdrawal | Yes | Yes |
| Tax Benefits | EEE | Same as NPS |
| Investment Choice | Available | Available |
| Voluntary Contribution | Permitted | Permitted |
Important Points to be noted
- “One-time, one-way switch” option for reverting to the NPS.
- Default Applicability: If no option is exercised, the employee continues under NPS.
- Past Retirees: Eligible for UPS benefits with arrears and interest (PPF rates)
UPS Calculator
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