In a relief for central government staff switching from the National Pension System (NPS), the Centre has clarified that employees if covered under the Unified Pension Scheme (UPS) can also get various benefits that were entitled under the Old Pension Scheme (OPS). According to the clarification, if an employee suffers untimely death during service or faces disability due to any serious illness or accident, then his family will get the benefit of the OPS.

According to a circular issued by the Department of Pension and Pensioner’ Welfare (DoPPW), the Centre has “issued instructions extending the option to Central Government civil employees covered under Unified Pension Scheme (UPS) for availing benefits of the Old Pension Scheme under the CCS (Pension) Rules, 2021, or the CCS (Extraordinary Pension ) Rules, 2023 in the event of the death of government employees or his discharge from service on account of invalidation or disablement.”

Last month, the government issued an order announcing a one-time option to all IAS, IPS and IFS officers under the NPS to choose OPS in this situation.

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“Every member of service covered under the National Pension System shall, at the time of joining service, exercise an option in Form 1 for availing benefits under the National Pension System or under the All India Services (Death-cum-Retirement Benefits) Rules, 1958 or the Central Civil Services (Extraordinary Pension) Rules, in the event of his death or boarding out on account of disablement or retirement on invalidation,” the order said.

Gratuity on retirement or death will be available under UPS as well

Now, all central government employees who switch to the UPS will be able to avail the benefit of retirement gratuity and death gratuity on the lines of OPS. The government has taken this decision, accepting a long-standing demand.

The Ministry of Personnel issued a clear order stating that the employees coming under UPS will now get the benefit of gratuity as per Central Civil Services (Payment of Gratuity under NPS) Rules, 2021. That is, now they will also be eligible for gratuity up to Rs 25 lakh, as is available under OPS.

Employees under NPS will get a one-time option to choose UPS

This order has come at a time when the central government has included UPS as an optional scheme under the NPS, and this system will come into effect from April 1, 2025. That is, employees who are in NPS will get a one-time option to choose UPS.

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Minister of State for Personnel Jitendra Singh described this decision as the government’s commitment towards the social security of employees. He said that this step removes the inequality related to pension and protects the interests of the employees.

Secretary of the Ministry of Personnel, Public Grievances and Pensions V. Srinivas described it as a progressive step and said that this ensures equality of pension benefits between employees involved in UPS and NPS.

It is worth noting that in 2021, the government had implemented the Central Civil Services (Implementation of National Pension System) Rules, under Rule 10 of which it was provided that the employees can opt for either NPS or OPS in case of death or disability.

Ranbheer Singh Dhariwal, Group Head – Social Security & Welfare, Protean eGov Technologies Ltd, said, “The extension of retirement and death gratuity benefits to employees under the UPS is a significant step towards enhancing financial security for government employees. This also underscores the importance of a robust pension system in safeguarding employees’ futures. This aligns UPS more closely with the objectives of a comprehensive, secure, and transparent pension framework. It underlines the government’s commitment to strengthening retirement security for millions of current and future central government employees.”