Entitlement Clarified for UPS Subscribers Absorbed in PSUs or Autonomous Bodies

The Department of Pension and Pensioners’ Welfare (DoPPW) has issued an Office Memorandum detailing the entitlement of Central Government employees covered under the Unified Pension Scheme (UPS) who are absorbed into public sector undertakings (PSUs), autonomous bodies, or similar organizations.

The clarification comes under Rule 16 of the Central Civil Services (Implementation of Unified Pension Scheme under the National Pension System) Rules, 2025, which governs the service-related provisions of UPS-covered employees.

Key Provisions Explained

Under the newly issued guidelines:

• Employees opting for UPS and absorbed in PSUs or bodies owned or controlled by the Central or State Government will be deemed to have retired from Government service on the date of such absorption.
• If the qualifying service is less than 10 years at the time of absorption, the accumulated pension wealth in the subscriber’s UPS corpus will be paid as a lump sum in accordance with the Pension Fund Regulatory and Development Authority (PFRDA) regulations.
• However, if the employee has completed 10 years or more of qualifying service, they will be entitled to assured pension payouts as admissible under the PFRDA (Operationalisation of Unified Pension Scheme under NPS) Regulations, 2025, similar to benefits on superannuation.

Special Provision for Department Conversions

In cases where a Central Government department is converted into a PSU or an autonomous body, the absorbed employees covered under UPS will have two options:

1. Seek retirement based on their qualifying Central Government service before the conversion and avail UPS benefits, provided they have at least 10 years of qualifying service; or
2. Continue service in the PSU/autonomous body and receive UPS benefits on the basis of combined qualifying service in both entities.

For employees choosing the second option, the government will specify the mechanism for the payment of UPS benefits in due course.

Implementation and Compliance

The DoPPW has directed all Ministries, Departments, and organizations to circulate these provisions among personnel handling NPS/UPS-related matters for strict compliance.

This clarification is expected to bring greater transparency and uniformity in handling pension entitlements of employees transitioning from Government service to autonomous or PSU setups under the Unified Pension Scheme framework.

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