Gratuity Benefits Extended to Central Govt Employees Under UPS

In a significant development for Central Government employees, the Department of Pension and Pensioners’ Welfare has clarified that those who opt for the newly introduced Unified Pension Scheme (UPS) will be entitled to retirement gratuity and death gratuity benefits, aligning them with the provisions currently available under the National Pension System (NPS).

🔍 What’s the Background?

The Ministry of Finance, through Notification No. FS-1/3/2023-PR dated 24 January 2025, introduced the Unified Pension Scheme as an optional pension framework for Central Government civil service recruits. The scheme came into effect on 1 April 2025 and provides a one-time option for existing NPS-covered employees to switch to UPS.

This reform aims to streamline pension options while addressing long-standing demands for a more secure and assured retirement benefit mechanism.

Latest Clarification on Gratuity Benefits

On 18 June 2025, the Department of Pension and Pensioners’ Welfare (DoPPW) issued Office Memorandum No. 57/01/2025-P&PW(B)/UPS/10498, formally clarifying that:

Central Government employees who choose the Unified Pension Scheme will be eligible for “Retirement Gratuity and Death Gratuity” under the Central Civil Service (Payment of Gratuity under NPS) Rules, 2021.

This step ensures continuity of service benefits and aligns UPS with critical welfare provisions that are vital in supporting employees and their families post-retirement or in the unfortunate event of death during service.

What This Means for Employees

With this clarification:

Employees opting for UPS will not lose gratuity benefits, a major concern initially raised by employee associations.
The gratuity entitlements will be governed by existing CCS rules applicable to NPS, bringing predictability and uniformity to the pension framework.
The decision is likely to encourage wider adoption of UPS, offering a balance between the old defined-benefit model and the NPS structure.

See PIB release: