Centre Equalises Gratuity for UPS Pensioners
The central government has formally approved a long-awaited reform to bring parity in gratuity benefits between Unified Pension Scheme (UPS) pensioners and their Old Pension Scheme (OPS) counterparts. In a major policy decision, the government has extended both retirement and death gratuity provisions to those under the UPS framework, ensuring financial equity for lakhs of central government employees.
Previously, employees covered under the National Pension System (NPS) and Unified Pension Scheme did not have access to the same gratuity benefits as those under OPS. This led to repeated appeals for equitable treatment in post-retirement entitlements. With this new move, the maximum gratuity limit of ₹25 lakh will now apply uniformly to UPS employees, resolving a key gap in pension benefits.
Gratuity parity
The change stems from rules notified under the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021. As per the new framework, employees under UPS will be eligible for retirement gratuity and death-cum-retirement gratuity, especially in cases of death during service or retirement due to invalidation or disability.
Officials clarified that the choice between UPS and OPS benefits, especially in death or invalidation cases, must be made by the employee during service and will be binding after death. This ensures clarity and eliminates procedural ambiguity for families and departments handling pension matters.
UPS pensioners
The reforms have been rolled out across all central ministries, with a directive to inform employees about the new entitlements and collect their formal preference declarations. Departments have been instructed to facilitate smooth implementation so that no eligible individual is left behind in receiving their rightful benefits.
This parity move is a direct response to longstanding concerns from employees who felt the UPS lacked critical support structures that OPS beneficiaries enjoyed. With this correction, a more balanced and secure retirement landscape has now been created.
NPS benefits
The Unified Pension Scheme, introduced in January 2025 as a restructured offering under the broader National Pension System, had promised flexibility and long-term returns. However, absence of gratuity parity had remained a sticking point. This amendment significantly enhances the scheme’s appeal, restoring faith among employees about the government’s commitment to equal treatment across different pension regimes.
This is part of a larger pension reform agenda that includes streamlining procedures, digitising pension disbursals, and introducing more inclusive and citizen-friendly systems. By rectifying the gratuity imbalance, the government has reinforced its focus on fairness and welfare for all central government employees.
