Gratuity Confirmed for Employees Switching from NPS to UPS
Great news for Central Government employees! The Department of Pension and Pensioners’ Welfare (DoPPW) has officially clarified that retirement gratuity and death gratuity benefits will continue for those who switch from the National Pension System (NPS) to the Unified Pension Scheme (UPS).
This clarification, issued in an office memorandum dated June 18, 2025, puts to rest any concerns that employees might lose out on gratuity benefits when making the switch. The DoPPW stated that employees covered by UPS will be eligible for gratuity benefits under the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021.
Understanding Your Gratuity Amount
While the DoPPW’s recent memo confirmed eligibility, it didn’t introduce new rules regarding the gratuity amount. This means the gratuity will be calculated the same way as it is under NPS. Currently, Central Government employees can receive a maximum gratuity of ₹25 lakh. The actual amount you receive will depend on your total service period.
Don’t Miss the Deadline!
Remember, June 30 is the last day to opt for the UPS. This is a one-time opportunity to switch from NPS, which offers market-linked returns, to UPS, which provides an assured pension upon retirement. Once you choose UPS, you won’t be able to switch back to NPS.
Additional Benefits: OPS Option on Death or Disablement
In another significant clarification, the DoPPW announced that the option to switch to the Old Pension Scheme (OPS) will be available in specific circumstances:
- Death during service: If a government servant passes away while still in service.
- Discharge due to invalidation or disability: If an employee is discharged from service because of invalidation or disability.
This means that Central Government civil employees who opt for UPS will also have the choice to avail benefits under the UPS, the CCS (Pension) Rules, 2021, or the CSS (Extraordinary Pension) Rules, 2023 in these situations.
New government servants joining service and opting for UPS will need to make this choice at the time of joining in Form 1. Existing government servants who have already opted for UPS should also exercise this option as soon as possible.