Unified Pension Scheme (UPS): A Comprehensive Guide for Government Employees

Retirement marks a new chapter—one that deserves financial clarity and peace of mind. For Central Government employees who’ve spent decades in service, the Unified Pension Scheme (UPS) brings that assurance. Launched by the Government of India and regulated by PFRDA, UPS replaces uncertainty with a structured, guaranteed pension plan that grows with inflation and continues to support families even after retirement. It’s a meaningful shift towards dependable, lifelong income—built for those who’ve built the nation.

Let’s break it down, simply and clearly.

What is the Unified Pension Scheme (UPS)?

The Unified Pension Scheme (UPS) is a pension scheme introduced by the Government of India, effective from 1st April 2025, as an option under the National Pension System (NPS) for Central Government employees. It is designed to provide assured, inflation-indexed and adequate retirement benefits.

UPS operates within the existing NPS architecture regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and is applicable to both serving and retired employees under specific conditions.

Key Objectives of UPS

• Ensure Assured Post-Retirement Payouts : Provide Central Government employees under NPS with GUARANTEED monthly payout after retirement.
• Establish a Fund-Based Payout System : Create a structured pension payout mechanism based on accumulated contributions and investments.
• Inflation Protection & Family Payout : Ensure that the Pension is 'Inflation Indexed', increases with time, & in case of death of an employee continues to the spouse.
• Enhance Financial Security for Retirees : Offer a stable and predictable source of income post-retirement, reducing financial uncertainty.
• Transition from existing pension structures : Migration from National Pension System (NPS) to Unified Pension Scheme (UPS).
• Gratuity Benefits: All Central Government Employees who opt for UPS will be eligible for retirement and Death gratuity benefits available under the Old Pension Scheme.

It’s more than a retirement product—it’s a commitment to dignity after decades of service.

Eligibility and How to Opt For Unified Pension Scheme (UPS)

How to opt for UPS: Online process

• Visit the Protean website i.e. https://enps.nps-proteantech.in/eNPS/NationalPensionSystem.html
• Click on 'Unified Pension Scheme' option.
• For Existing Members of NPS: Select 'Migrate from NPS to UPS'
• For New Recruits (joining after l April 2025): Select 'Register for UPS'
• Fill out the required details. Enter Aadhar number and OTP and Submit.

Timelines for Option Exercise:

• Existing employees/retirees: By 30th September 2025.
• New recruits: Within 30 days of joining.

Contributions under Unified Pension Scheme (UPS)

1.Contribution to Individual Corpus:

• Employee contributes 10% of Basic Pay + DA. (this is similar to the current contribution made in NPS).
• Government contributions 10% of Basic Pay + DA. (This is 14% in NPS)

2.Pool Corpus in UPS:

• It is a central pool fund created under UPS, consisting of: Government Contribution: 8.5% of Basic Pay+ DA (This is NIL in NPS).

Total Contribution : 28.5% in UPS Vs. 24% in NPS
The total Govt. contribution is higher by 4.5% of Basic Pay + DA in UPS than in NPS.

Transferred Individual Balances : Post Superannuation, Funds from an individual subscriber's account will move to the Pool Corpus under UPS and will be used to pay annuity and other benefits.

Investment of Individual Corpus in UPS: Two options

a) Default Pattern:

1. It ensures 100% guarantee of Pension as benchmark corpus is calculated based on this pattern.
2. Equity is capped at 25% and will remain the same till superannuation (no tapering).
3. The Fund in this choice is managed in almost equal proportion by 3 Pension fund managers
   i.e. UTI Pension Fund, SBI Pension Fund, and LIC Pension Fund.

b) Non-Default Pattern:

Subscribers can also choose their Pension Fund and the following Investment pattern

1. Conservative Life Cycle Fund (LC-25): Equity capped at 25% up to age 35 years, tapering thereafter.
2. Moderate Life Cycle Fund (LC-50): Equity capped at 50% till age of 35, tapering thereafter.
3. Scheme G: 100% in Government Securities.

Benchmark Corpus in UPS:

Benchmark Corpus is calculated for each subscriber calculated based on investment as per 'Default Pattern.
In case employee chooses option other than Default pattern, the individual corpus may differ from Benchmark Corpus

1. If the corpus exceeds the benchmark corpus, the excess amount is paid to the subscriber
2. If the corpus is below the benchmark corpus, the subscriber will have to:
   1. replenish the shortfall of funds OR
   2. Pension payouts will be proportionately reduced.

Switching options between Default and Non Default patterns will be there.

But for the time period corpus is invested in Non-default pattern, if the performance is less than Benchmark Corpus (Default pattern), subscriber has to replenish the difference or take proportionate reduction of annuity.+

In case a subscriber wants 'Guaranteed Pension' without risk of replenishing the funds, he/she should opt and stay invested in 'Default Pattern' under UPS.

Benefits Under Unified Pension Scheme (UPS)

Eligibility for Benefits:

Employees are eligible for UPS benefits in the following cases:

• Superannuation - Employees retiring after completing at least 10 years of service will receive benefits from the date of superannuation.
• Retirement by Government - If an employee is retired under Fundamental Rule 56(i) (not as a penalty), benefits start from the date of retirement.
• Voluntary Retirement - Employees opting for voluntary retirement after 25 years of service will receive benefits from their national superannuation date.

Note: Notwithstanding enrollment of an employee in the UPS option under NPS, such option shall cease to apply in case of UPS subscriber who has been removed or dismissed from service or who has resigned his services.

Computation of Benefits:

• Lump Sum Payment - One-time payment based on last drawn salary & total qualifying service, calculated as 1/10th of Basic Pay + DA for every completed six months of service.
• Assured Monthly Payout - It is "Admissible Payout + Dearness Relief on admissible payout" Admissible Payout:
• For minimum Qualifying Service of:
  1. Equal to or more than 25 years: 50% of the average Basic Pay of the last 12 months.
  2. 10-25 years: proportionate reduction.

  3. Less than 10 years: NIL

     Proportionate reduction in payout is done if Individual Corpus is less than benchmark corpus OR any final withdrawal made.
     Minimum Assured Payout : Rs. 10,000 per month is guaranteed for employees with at least 10 years of qualifying service.

Dearness Relief (DR) : Paid on admissible Payout and Family payout It is based on the Dearness rate percentage as notified by the Central Government from time to time. Eg: Currently as announced by Office Memorandum of 2nd April 2025, for CG employees, DR is 55%.

Family Payout : Upon demise of the employee, legally wedded spouse will receive: 60% of admissible payout and dearness relief for life.

Gratuity Benefits :CG Employees opting for UPS are eligible for 'Retirement Gratuity and 'Death Gratuity' as per the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021.

Final Withdrawal - Subscribers have the option to withdraw 60% of the Individual Corpus at Superannuation, payout will be reduced proportionately

Voluntary Retirement after 25 years of service - Final withdrawal up to 60% at the time of voluntary retirement and also the lump sum payment is payable at the time of voluntary retirement. Monthly payout will start from the date of deemed superannuation date i.e. 60 years of age.

Department of Pension and Pensioners' Welfare, allows Central Government employees under the Unified Pension Scheme (UPS) to opt for Old Pension Scheme (OPS) benefits for 'Death while in service' and 'Discharge due to medical reasons'

Type of Payouts under UPS

Processing & Payment:

Release of payment on NPS Trust approval of monthly Payouts:

Monthly payouts & DR are credited to the subscriber's bank account.

• In UPS, pension is paid by the Central Government.
  (in NPS, Pension is paid by an Annuity Service Provider which is a Life Insurance company)

Benefits for Superannuated/Retired Employees Under NPS (Before March 31, 2025)

Employees who retired or superannuated under the National Pension System (NPS) on or before March 31, 2025, & meet the required conditions under regulations, will be eligible for the following benefits:

• Lumpsum Payment : A one-time payout based on service duration & last drawn salary.
• Monthly Top-Up : An additional monthly amount over their NPS annuity.
• Dearness Relief (DR) : Dearness Relief (DR) is paid on admissible & family payouts as per Central Government rates. It is applicable only after the payout begins.
• Interest on Arrears : Simple interest (at Public Provident Fund rates) on pending payments, from the month after retirement until the claim is submitted.

To know the value of benefits, subscribers can go to https://enps.nsdl.com/eNPS/National PensionSystem.html and check UPS calculator there.

Why Does UPS Deserve Serious Consideration?

UPS has been built on one simple idea: retirement should feel earned, not uncertain.It provides the clarity employees have long sought—especially in the face of market volatility. It prioritizes family security, rewards long service, and offers income that keeps pace with inflation.

For Central Government employees, especially those close to retirement, the next few months are crucial. Understanding the scheme fully and opting in during the allowed window could shape your financial comfort for decades to come.

Visit your nearest UTI Pension Fund branch or www.utipension.com to know more about UPS. For more assistance get in touch with us at contact@utipf.co.in and our team will be happy to assist you at the earliest.