Compulsory Retirement Under UPS: DoPPW Clarifies Assured Payout Rules

The Department of Pension and Pensioners’ Welfare (DoPPW) has issued an Office Memorandum (No. 57/03/2022-P&PW(B)) clarifying the impact of compulsory retirement as a penalty on the Assured Payout for Central Government employees covered under the Unified Pension Scheme (UPS).

Background

The clarification follows the notification of the Central Civil Services (Implementation of Unified Pension Scheme under the National Pension System) Rules, 2025, which govern service-related matters of employees who have opted for UPS — a new framework combining features of the traditional pension system and NPS.

Minimum and Maximum Payouts on Compulsory Retirement

Under Rule 20 of the UPS Rules, 2025, if a Central Government employee who has opted for UPS is compulsorily retired from service as a penalty, the authority imposing such a penalty may grant benefits ranging from two-thirds to the full admissible payout from the individual corpus under the scheme.

The Assured Payout under this provision will be determined by the competent authority and disbursed in accordance with the Pension Fund Regulatory and Development Authority (Operationalisation of Unified Pension Scheme under NPS) Regulations, 2025.

Consultation with UPSC for Reduced Benefits

In cases where less than the full payout is sanctioned, the Union Public Service Commission (UPSC) must be consulted before issuing the order. This ensures an element of procedural oversight and fairness in decisions affecting employees’ post-retirement benefits.

No Prejudice to Gratuity Entitlement

The order further clarifies that the decision on the assured payout will be without prejudice to any orders passed under the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021. Therefore, employees will remain eligible for gratuity as per existing provisions, even if they face compulsory retirement under UPS.

Assured Minimum Benefit

Importantly, the memorandum emphasizes that the payout in such cases shall not be less than the minimum payout admissible under the Unified Pension Scheme — offering a basic level of financial protection even in punitive retirement scenarios.

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