Unified Pension Scheme: Railway Employees Now Eligible For Retirement And Death Gratuity Benefits

The Ministry of Railways issues a notification on July 7, 2025, announcing the extension of retirement and death gratuity benefits to railway employees under the Unified Pension Scheme (UPS). The Indian railway employs more than a million people and is one of the largest employers in the country. With the latest notification, railway employees can now be assured of receiving gratuity benefits upon retirement or in the event of death during service. The retirement and death gratuity benefits will be similar to what is offered under the National Pension System (NPS). It is important to note that UPS has been implemented effective April 1, 2025, for central government employees, and they can opt to stay covered under the NPS or switch to UPS, which offers a minimum assured pension of Rs 10,000, subject to a minimum 10 years of service.

The railway notification, dated July 7, 225, reads, “It is clarified that the Railway employees covered under Unified Pension Scheme shall be eligible for benefit of ‘Retirement gratuity and Death gratuity on the same terms and conditions as are applicable to the Railway employees covered under the National Pension System in terms of Board’s letter No. 2012/F(E)III/1(1)/4 dated 05.09.2016.”

Note that gratuity was not included in the UPS offerings till the time of implementation in April this year, and has been incorporated later. On June 18, 2025, the Department of Pension and Pensioners’ Welfare (DoPPW) issued a memorandum in this regard.

It read, “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.”

Retirement Gratuity

Retirement gratuity is a lump sum amount paid to employees upon their superannuation. It is a one-time payment. It is calculated based on the employee’s monthly salary and the number of years in service.

Death Gratuity

Death gratuity is also a one-time lump sum amount, but it is paid in case of an employee’s death during service. Thus, it is paid to the family of the deceased employee.

Pension under UPS is available only to the central government employees at their option. They can select either of the two pension options available to them: UPS or NPS. However, whatever option they opt for will be irrevocable and cannot be changed in the future. After implementing UPS on April 1, 2025, the government stipulated 3 months for employees to exercise the pension selection option. However, due to muted response from employees, the last date has been extended to September 30, 2025. Meanwhile, the NPS Trust launched the pension calculator to compare both UPS and NPS to help employees decide how much they could get after retirement and exercise the option.