Unified Pension Scheme: PFRDA Notifies Operational Rules; Check Eligibility, Benefits, Payout Calculation – News18
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According to the PFRDA (Operationalisation of UPS Under NPS) Regulations 2025 notified on March 19, the UPS will be applicable to only central government employees as of now.
Under the Unified Pension Scheme, the assured payout will be calculated based on the last 12-month salary, months of qualified service, and retirement corpus.
The Pension Fund Regulatory and Development Authority (PFRDA), which will manage the Unified Pension Scheme (UPS), has notified the operational regulations for the scheme on March 19, 2025. The UPS, which was announced in August last year, will be implemented on April 1, 2025.
This new scheme, which combines aspects of both the Old Pension Scheme (OPS) and the National Pension System (NPS), aims to provide employees with a guaranteed pension, offering financial stability and dignity after retirement.
Eligibility
According to the PFRDA (Operationalisation of UPS Under NPS) Regulations 2025 notified on March 19, the UPS will be applicable to only central government employees as of now.
“The legally wedded spouse in case of a subscriber who has superannuated or retired and has demised prior to exercising the option for UPS” can also avail benefits under UPS.
Contribution & Fund Options
The monthly contribution of the UPS subscriber shall be 10 per cent of the basic pay (including non-practising allowance, where applicable) and dearness allowance thereon, which shall be credited to the individual PRAN of UPS Subscriber. The equal amount will be matched by the government.
According to the regulations, UPS subscribers will have the choice of default pattern of pension fund and default investment. They will have option to either go for a 100 per cent bond investments, or partial equity options (up to 50 per cent of their corpus) — Conservative Life Cycle Fund (with 25% equity exposure) and Moderate Life Cycle Fund (with 50% equity investment).
Full PFRDA notification on UPS Regulations 2025 can be accessed here.
Can You Choose Or Switch Pension Fund?
“UPS Subscriber shall have an option to choose the pension fund and the investment pattern including a default pattern in accordance with the guidelines issued by the Authority, for the investment of contributions made in the individual corpus under UPS,” according to the regulations.
UPS subscribers not exercising such choice of pension fund shall be deemed to have opted for default pattern as determined by the Authority, PFRDA said.
UPS Subscriber shall have an option to change the choice of pension fund once in a financial year and investment choice twice in a financial year, according to the PFRDA notification.
How To Join?
To opt for the UPS, a central government employee in service as on April 1, 2025, who is subscribed to NPS shall submit an application to the concerned Drawing and Disbursing Officer (DDO) in Form A2 of Schedule I to enrol in UPS option under NPS in accordance with these regulations.
New recruit joining on or after April 1, 2025, who decides to chooses the UPS option under NPS, shall submit an application to the concerned DDO in Form A1 of Schedule I, to enrol in UPS option under NPS in accordance with these regulations.
For those already retired, they will have to submit Form B2 of Schedule I along with KYC documents to the concerned DDO.
In case of death of the employee, the legally wedded spouse shall submit Form B6 of Schedule I to the concerned DDO, along with KYC documents.
The applications can be submitted online or physically.
Pension Corpus: Individual Vs Pool
The UPS brings an enhanced government contribution of 18.5 per cent, up from the earlier 14 per cent. However, employee contributions remain the same at 10 per cent of basic pay plus dearness allowance (DA).
The total pension corpus will be split between two funds: an individual pension fund and a separate pool corpus. The individual fund will comprise both employee and matching government contributions, while the pool corpus will only have additional government contributions.
UPS Benefits
Under the UPS, employees will be eligible for an assured payout under the following conditions:
Superannuation: Employees who retire after completing at least 10 years of qualifying service will receive an assured pension from the date of their retirement.
Retirement under FR 56(j): Employees retiring under government provisions, but without penalty, will also qualify for the assured payout starting from the date of their retirement.
Voluntary Retirement: Employees opting for voluntary retirement after 25 or more years of service will receive a payout starting from the date they would have reached superannuation, had they continued in service.
However, the Unified Pension Scheme will not apply to employees who are dismissed, removed, or resign from service. In such cases, they will not be eligible for the UPS.
Payout Calculation Under UPS
Under the Unified Pension Scheme, the assured payout will be calculated based on the last 12-month salary, months of qualified service, and retirement corpus. The UPS offers several tiers of payout based on years of service:
Full Assured Payout: Employees with 25 or more years of qualifying service will receive 50 percent of their average basic pay from the last 12 months of service.
Proportional Payout: Employees with less than 25 years of service will receive a proportional payout based on their qualifying service.
Minimum Guaranteed Payout: Employees with 10 or more years of service are assured a minimum payout of Rs. 10,000 per month.
Additionally, for employees opting for voluntary retirement after 25 years of service, the payout will begin from the date they would have reached the age of superannuation.
