About

Eligibility

UPS is available to:

• Existing Central Government Employees under NPS as on 01.04.2025.
• New Recruits joining Central Government service on or after 01.04.2025.
• Retired NPS Subscribers who superannuated or retired on or before 31.03.2025, provided:
  • Minimum 10 years of qualifying service.
  • Retirement under FR 56(j) (not as a penalty).
  • Legally wedded spouse as on date of retirement, in case of subscriber’s demise.

Timelines for Option Exercise:

• Existing employees/retirees: By 30th September 2025.
• New recruits: Within 30 days of joining.

Features of UPS

Contribution Structure

• Employee Contribution: 10% of Basic Pay + Dearness Allowance (DA).
• Government Contribution: Matching 10% (from payroll system).
• Additional Government Contribution: An estimated 8.5% of Basic Pay + DA to a Pool Corpus.

Corpus Composition

• Individual Corpus (IC): Accumulated contributions of employee and matching government share.
• Benchmark Corpus (BC): Notional corpus computed using default investment pattern, regular and timely contributions and without any partial withdrawal & voluntary corpus.

Investment Options

• Default Pattern (auto-assigned if no choice made).
• 100% Government Securities (Scheme G).
• Life Cycle Funds:
  • LC-25 (max 25% equity).
  • LC-50 (max 50% equity).
• Change Frequency:
  • Pension Fund: Once per financial year.
  • Investment Pattern: Twice per financial year.

Benefits under UPS

Assured Payout, at the rate of 50% of last 12 monthly average basic pay, immediately prior to superannuation. Assured payout is payable after a minimum 25 years of qualifying service. In case of lesser qualifying service period, proportionate payout would be admissible.

Minimum Guaranteed Payout: ₹10,000/month (after 10 years of service).

Proportionate payout: Between 10 and 25 years of service.

Final Withdrawal: Up to 60% of IC or BC, whichever is lower. Reduces assured payout proportionately. Option to replenish shortfall to restore full payout.

Lump Sum Payment: ₹(1/10) × (Basic Pay + DA) for every completed 6 months of qualifying service. Payable on superannuation, voluntary retirement, or retirement under FR 56(j).

Family Payout:

• 60% of subscriber’s admissible payout to legally wedded spouse as on date of retirement.

Dearness Relief: Payable on both admissible payout and family payout, as notified by the Government.

Gratuity Benefits: Retirement Gratuity and Death Gratuity are extended to UPS subscribers under the CCS (Payment of Gratuity under NPS) Rules, 2021.

Tax Treatment

As per the CBDT Office Memorandum dated 02.07.2025, the following provisions of the Income Tax Act, 1961 apply to UPS:

• Section 80CCD(1), 80CCD(1B), 80CCD(2), 80CCD(3), 80CCD(4) – Deductions for contributions.
• Section 10(12A), 10(12B) – Exemptions on withdrawals and annuities.

These provisions apply mutatis mutandis to UPS, subject to prescribed limits. Any deviation in payout or contribution structure would require legislative amendment.

Operational Process

Enrollment

• Form A1: For new recruits.
• Form A2: For existing NPS subscribers opting for UPS.

Claim Forms

• B1–B6: Depending on subscriber status and whether benefits were availed.

UPS Payout Order (UPO)

• Issued by PAO.
• Includes details of subscriber, spouse, corpus values, payouts, and bank details.
• Sent to NPS Trust for benefit release.

Partial Withdrawals

• Up to 25% of self-contribution (excluding returns).
• Allowed 3 times (including NPS withdrawals).
• For specific purposes: education, marriage, housing, medical, disability, skill development.

Comparative Overview: NPS vs UPS

Parameter	NPS	UPS
Contribution	10% (employee) + 14% (Govt.)	10% (employee) + 10% (Govt.) + 8.5% (Pool Corpus)
Assured Payout	No	Yes (subject to conditions)
Minimum Pension	No	₹10,000/month
Dearness Relief	No	Yes
Final Withdrawal	Up to 60%	Up to 60%
Family Benefits	Depends on annuity	60% of subscriber’s payout
Partial Withdrawal	Yes	Yes
Tax Benefits	EEE	Same as NPS
Investment Choice	Available	Available
Voluntary Contribution	Permitted	Permitted

 

Additional Notes

• Irrevocability: Once opted, UPS cannot be reversed.
• Default Applicability: If no option is exercised, the employee continues under NPS.
• Past Retirees: Eligible for UPS benefits with arrears and interest (PPF rates).