Unified Pension Scheme (UPS) Notification – 2025
%20Notification%20%E2%80%93%202025.jpg "Unified Pension Scheme (UPS) Notification – 2025")
In a gazette notification yesterday, the Pension Fund
Regulatory and Development Authority (PFRDA) introduced regulations for
operationalizing UPS.
1. Overview of the UPS
The Unified Pension Scheme (UPS) is introduced by the
Government of India for Central Government employees, effective from April
1, 2025. It aims to provide a fund-based pension system with assured
payouts upon superannuation or retirement.
2. Eligibility Criteria
The scheme applies to:
- New
recruits in Central Government service from April 1, 2025
onwards.
- Existing
employees under the National Pension System (NPS) as of March
31, 2025, who opt to switch to UPS.
- Voluntary
retirees with at least 25 years of qualifying service.
- Employees
retiring under FR 56(j) (non-penalty retirement under Central Civil
Services Rules).
3. Contributions
- Employee
Contribution: 10% of Basic Pay (including non-practicing allowance,
where applicable) and Dearness Allowance.
- Government
Matching Contribution: The Central Government will contribute an equal
amount (10%) to the individual's PRAN account.
- Pool
Corpus Contribution: The Government will add 8.5% of Basic Pay
and DA to the Pool Corpus, which will fund the assured payouts.
4. Payouts and Benefits
- Final
Withdrawal: Employees can withdraw up to 60% of their individual
corpus at superannuation. The remaining amount is transferred to the
Pool Corpus, ensuring monthly payouts.
- Monthly
Pension: The scheme guarantees regular monthly payouts, funded
by the Pool Corpus.
- Dearness
Relief: Regular Dearness Relief (DR) adjustments will be made
based on inflation rates.
- Family
Payouts: In case of the subscriber's death, the legally wedded
spouse will receive the family payout benefits.
5. Investment and Fund Management
- Investment
Objective: The contributions will be managed by Pension Funds
with a focus on:
- Optimizing
returns.
- Ensuring
the safety of contributions.
- Investment
Choices:
- Default
Pattern: For those who do not opt for a specific fund.
- Active
Choice: Allows 100% investment in Government securities.
- Auto
Choice: Lifecycle-based investments with either 25% or 50% equity
exposure.
- Fund
Switching: Subscribers can switch their pension fund once per year
and modify investment choices twice per year.
6. Withdrawal and Exit Options
- Partial
Withdrawals: Allowed for:
- Children's
higher education or marriage.
- Purchase
or construction of a house.
- Treatment
of critical illnesses.
- Exit
on Voluntary Retirement: Available after 25 years of qualifying
service.
- Exit
on Superannuation: With a guaranteed monthly payout from the Pool
Corpus.
7. Administrative and Operational Aspects
- The Central
Recordkeeping Agency (CRA) will handle:
- Enrollment,
identification, and fund management.
- Data
collection and sharing.
- Annual
verification of life certificates.
- The NPS
Trust will oversee payouts and manage the Pool Corpus.
8. Forms and Documentation
- Employees
must fill out specific forms such as:
- Form
A1: For new recruits opting for UPS.
- Form
A2: For existing NPS subscribers switching to UPS.
- Form
B1-B6: For various claims and payouts.
Key Takeaway:
The UPS offers assured monthly payouts after retirement, with flexible
withdrawal options, family benefits, and regulated investment management.
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