Gratuity Benefits Extend To Employees Under The Unified Pension Scheme (UPS)

The government has decided to extend the retirement and death gratuity benefits to the Unified Pension Scheme (UPS). UPS was implemented on April 1, 2025, for central government employees. They are given the option to either stay with the current National Pension Scheme (NPS) or switch to UPS by June 30, 2025. UPS assures a fixed pension after a service period of 10 years and also a one-time lump sum payment upon retirement. It also promises an assured family pension, 60 per cent of the pension given to the employee in the event of death. However, the rules were silent for the scenario if an employee dies during service.

In this regard, Union Minister Jitendra Prasad announced on June 18, 2025, that employees covered under the UPS will now be eligible to receive 'retirement and death gratuity benefits'. The employees covered under the UPS will now be considered for gratuity benefits under the provisions of the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021, or the CCS (Extraordinary Pension) Rules, 2023.

Gratuity For All Employees Under UPS

The Department of Pension and Pensioners' Welfare (DoPPW) issued an office memorandum to effect the rule. It reads, "DoPPW vide its OM dated June 18, 2025, 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 death of Government employees or his discharge from service on account of invalidation or disablement."

Death gratuity benefits are a lump sum amount paid to the family in case a government employee dies while working.

Employees who have already opted for UPS or plan to opt for it in the future need to fill out a prescribed form as per Rule 10 Of The CCS (Implementation Of NPS) Rules, 2021 to avail of benefits in case of death or disablement. 

Rule 10 Of The CCS (Implementation Of NPS) Rules, 2021

Rule 10 of the CCS (Implementation of NPS) Rules, 2021 deals with the pension provisions applicable in the event of an employee's death under the NPS. It outlines the options available under the NPS to opt for either NPS or the Old Pension Scheme (OPS) if a government employee passes away while in service during service or is discharged due to disability or invalidation.

As UPS is available for the NPS employees, this rule will now be applicable to them too. To avail of the benefit, employees are required to fill Form 1, at the time of joining the service.

The OM of the Ministry of Personnel, Public Grievance, and Pensions, dated May 9, 2025, "In accordance with rule 10 of the Central Civil Services (Implementation of National Pension System) Rules, 2021, every Government servant covered under the National Pension System (NPS) shall, at the time of joining Government service, exercise an option in Form 1 for availing benefits under the NPS or under the CCS (Pension) Rules or the CCS (Extraordinary Pension) Rules in the event of his death or boarding out on account of disablement or retirement on invalidation. Government servants, who are already in Government service and are covered by the NPS, shall also exercise such an option."

UPS To Become Attractive

Manjeet Singh Patel, Chairman, the Central Government Employees Confederation, lauded the step. He posted on X (formerly Twitter), "In our delegation meeting with the Ministry of Personnel and Pension on February 24, we drew the attention of the government on this issue. The Pension Secretary has done a great job by solving this, which we welcome."

According to the minister, the step to extend death gratuity benefits to government employees under the UPS will bring parity of social security among all government employees.