Unified Pension Scheme Employees Now Eligible for Retirement, Death Gratuity

Unified Pension Scheme New Changes: The Central Government has recently announced a major relief for employees under the National Pension System (NPS), also referred to as the Unified Pension Scheme. In a significant policy shift, NPS-covered employees will now be eligible to receive retirement and death gratuity benefits — a privilege previously limited to those under the Old Pension Scheme (OPS). This move is aimed at ensuring social security parity and financial support for central government employees who joined service on or after January 1, 2004, and were automatically enrolled under the NPS.

Earlier, employees covered under NPS did not qualify for gratuity benefits, creating a longstanding demand for equal treatment in post-retirement and death benefits. With the government’s latest decision, eligible NPS employees will now receive a one-time gratuity amount upon superannuation, resignation after completing a minimum of five years of service, or in the unfortunate event of death or disability. The decision is being seen as a step toward bridging the gap between NPS and OPS, and providing NPS subscribers with a more secure and dignified post-retirement life. This development is expected to benefit lakhs of government employees and is being welcomed by employee unions across the country.

Unified Pension Scheme

The Unified Pension Scheme is an initiative by the Government of India that aims to bring together multiple existing pension schemes under a single umbrella to streamline operations, ensure better coverage, and enhance transparency and efficiency in the disbursement of pensions.

Objective of the Unified Pension Scheme

• To simplify pension processes for citizens.

• To integrate various pension systems like EPFO, NPS, and other state schemes.

• To offer a centralized digital platform for all pensioners.

• To ensure social security for all workers, especially in the unorganized sector.

Key Features of the Unified Pension Scheme

Beneficiary Categories

1. Employees of the Organized Sector (via EPFO/EPS-95)

2. Unorganized Workers (via PM-SYM, APY)

3. Gig & Platform Workers (under e-Shram integrated with UPS)

4. Self-employed / Informal Sector Workers

Pension Schemes Unified Under UPS

Contribution Details

• Varies by scheme – e.g., in PM-SYM, workers contribute ₹55 to ₹200/month, matched by govt.

• In EPS, employer contributes 8.33% of salary (up to ₹15,000).

Registration Process

1. Visit the official Unified Pension Portal (to be announced fully after integration).

2. Enter Aadhaar, mobile, and employment details.

3. Link bank account and UAN/e-Shram/NPS account, if applicable.

4. Select pension scheme and contribution preferences.

Digital Integration

• Will be linked to:

  • e-Shram portal

  • NPS Trust system

  • EPFO database

  • Aadhaar and DigiLocker

  • National Pension Scheme Lite

Security & Transparency

• Real-time tracking of contributions

• Biometric/Aadhaar authentication

• Mobile SMS/email alerts

• Unified grievance redressal system

Latest Updates (as of 2025)

• Government is piloting UPS integration with e-Shram cards and NPS accounts.

• Full-scale launch expected state-wise in phased manner.

• Will allow portability for workers migrating between jobs/sectors.

Helpline & Support

• EPFO Toll-Free: 1800-118-005

• NPS CRA: 1800-110-708

• PM-SYM Helpdesk: 1800-267-6888

• Or visit the official site of [National Pension System (https://npscra.nsdl.co.in)]

Unified Pension Scheme Employees Now Eligible for Retirement, Death Gratuity Details

In a significant move benefiting lakhs of central and state government employees, the government has announced that employees covered under the National Pension System (NPS) or Unified Pension Scheme will now be eligible for retirement gratuity and death gratuity, aligning their benefits with those available under the old pension scheme.

What is Gratuity?

Gratuity is a one-time lump-sum financial benefit paid to employees as a token of appreciation for their long-term service. It is governed under the Payment of Gratuity Act, 1972. Previously, gratuity was not part of the NPS framework.

Key Highlights of the New Gratuity Provision

1. Who is Eligible?

• Central Government employees recruited on or after January 1, 2004, who are covered under the NPS

• State Government employees (only where adopted)

• Autonomous bodies under NPS

2. Types of Gratuity Allowed

• Retirement Gratuity: Paid upon superannuation (retirement at age 60)

• Death Gratuity: Paid to the family/nominee in case of an employee’s death in service

Gratuity Calculation Details

1. Retirement Gratuity

• Eligible after 5 years of continuous service

• Formula:
  Gratuity = (Last drawn basic pay + DA) × ½ × No. of completed six-monthly periods of service

2. Death Gratuity Slab

• Less than 1 year of service: 2 times of basic pay

• 1 to 5 years: 6 times of basic pay

• 5 to 20 years: 12 times of basic pay

• 20+ years: Half of emoluments × years of service (max. ₹20 lakhs)

Background of the Change

Earlier, NPS employees were not entitled to gratuity benefits like their counterparts in the Old Pension Scheme (OPS). This led to widespread dissatisfaction and representations by employee unions.
In response, the 7th Central Pay Commission recommended extending gratuity benefits to NPS employees. The Ministry of Finance officially approved it via notification, and now most government departments are implementing it.

How to Claim Gratuity Under NPS

1. For Retirement Gratuity

   • Submit Form 1 (Gratuity Claim) through your department

   • Include service book, identity proofs, and last pay certificate

2. For Death Gratuity

   • Nominee/legal heir must submit claim along with death certificate

   • Department forwards claim to concerned PAO (Pay & Accounts Office)

Tax Implications

• Gratuity received by government employees (including under NPS) is fully exempt from income tax under Section 10(10) of the Income Tax Act.

• The maximum tax-exempt gratuity amount is ₹20 lakhs.

State Government Implementation Status

Some states like Rajasthan, Maharashtra, and Madhya Pradesh have already issued notifications to extend these gratuity benefits under NPS, while others are in the process. Employees are advised to check with their respective state finance departments.

Conclusion

This move to extend retirement and death gratuity to Unified Pension Scheme/NPS employees bridges a long-standing gap between the old and new pension schemes. It acknowledges the service and sacrifice of government workers and brings financial security to their families during retirement or after death.

FAQs

1. What’s the recent development for UPS employees?

As of June 18, 2025, central government employees under UPS are now entitled to retirement and death gratuity benefits, aligning them with benefits previously exclusive to OPS subscribers.

2. Who is eligible for UPS in the first place?

• Existing central government employees under NPS as of April 1, 2025

• New recruits joining on or after April 1, 2025

• Retirees under NPS who retired by March 31, 2025, with at least 10 years of qualifying service—including those retired under Fundamental Rules 56(j)—and their legally wedded spouses.

3. What’s the deadline to opt into UPS?

• Existing/NPS retirees/spouses: Within 3 months from April 1, 2025 (i.e., by June 30, 2025) .

• New recruits: Within 30 days of joining.

4. What is retirement gratuity under UPS?

• Payable after minimum 5 years of qualifying service.

• Based on ¼ of emoluments (basic pay + DA) for each 6 months of service.

• Capped at 16.5 times emoluments or ₹25 lakh, whichever is lower

5. What about death gratuity?

Paid if an employee dies while in service:

• < 1 year: 2x emoluments

• 1–5 years: 6x

• 5–11 years: 12x

• 11–20 years: 20x

• ≥ 20 years: ½ emoluments per completed 6‑month period, up to ₹25 lakh.

6. Any lump-sum payments at retirement?

Yes — at retirement, UPS grants a one-time lump sum in addition to gratuity:

• 1/10 of monthly emoluments for every 6 months of service completed.

7. What pension benefits are available under UPS?

• Minimum pension: ₹10,000 per month after ≥ 10 years of service.

• Assured pension: 50% of average basic pay (last 12 months) for ≥ 25 years of service.

• Family pension: 60% of the original pension for the surviving spouse.

• Inflation indexation via DA adjustments

8. How does UPS differ from OPS & NPS?

• UPS offers a guaranteed pension like OPS, but retains investments through NPS.

• The government pays 18.5% of salary vs. 14% under NPS.

• Unlike OPS, UPS is less fiscally burdensome and maintains a defined-contribution structure with a minimum-guarantee layer.

9. What if I miss the June 30, 2025 deadline?

You will remain under your current scheme (typically NPS), but can still switch under limited conditions only if exempted from the deadline.

10. Can NPS retirees or their spouses claim UPS benefits?

Yes — those who retired under NPS on or before March 31, 2025, with ≥ 10 years service (or spouses), are eligible for lump-sum, pension top-ups, and arrears, claimable by June 30, 2025

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