Centre has notified Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025 to regulate service matters relating to benefits under the Unified Pension Scheme (UPS) for central government employees.
Initial Information
- Scheme Name: Unified Pension Scheme (UPS)
- Notified By: Department of Financial Services (DFS), Government of India
- Effective Date: 1 April 2025
- Regulator: Pension Fund Regulatory and Development Authority (PFRDA)
- Coverage: Central Government employees enrolled under NPS (with one-time option to switch to UPS)
Timeline
- 24 Aug 2024: Union Cabinet approved UPS.
- 24 Jan 2025: DFS notified UPS as an option under NPS.
- 19 Mar 2025: PFRDA notified UPS operationalisation regulations.
- 1 Apr 2025: UPS to become operational.
Key Features of Rules
Enrolment & Switching
- Employees under NPS can opt for UPS.
- Switch facility: Allowed from UPS to NPS one year before retirement or 3 months before Voluntary Retirement Scheme (VRS).
Contribution & Compensation
- Both employee and government to contribute.
- Compensation payable to employee for delays in registration or credit of contributions in NPS account.
Retirement Benefits
- Full pension benefits available after 20 years of service (earlier proposal was 25 years).
- Benefits payable in cases of:
- Superannuation
- Premature retirement
- Voluntary retirement
- Absorption in PSU/autonomous body
- Retirement on invalidation
- Resignation from service
Special Provisions
- In case of death or disability during service → option for CCS (Pension) Rules or UPS benefits.
- Provides better financial security for families of deceased/disabled employees.
Disciplinary/Service Termination Cases
- Rules specify impact of:
- Compulsory retirement
- Dismissal/removal from service
- Pending departmental/judicial proceedings at time of retirement
Significance
- Marks a historic welfare reform by reducing qualifying service for full pension from 25 years to 20 years.
- Provides enhanced social security and clarity for NPS-covered employees.
- Balances flexibility (switch options) with stronger family protection provisions.
- Strengthens India’s pension system by integrating UPS with NPS under PFRDA regulations.
Key Facts
- NPS (National Pension System): Introduced in 2004, it is a defined contribution scheme managed by PFRDA (Pension Fund Regulatory and Development Authority).
- UPS (Unified Pension Scheme): Announced in 2024, designed as a hybrid between Old Pension Scheme (OPS) and NPS, offering both guaranteed pension security and market-linked growth.
- OPS vs NPS vs UPS:
- OPS (Old Pension Scheme): Defined benefit, fully government-funded, fiscally unsustainable.
- NPS: Defined contribution, market-driven, individual accounts.
- UPS: Combines elements of both — security + sustainability.