Everything to Know About Unified Pension Scheme (UPS) in Q&A Form along with Illustrations

In this article we have attempted to answer all the questions and doubts related to Unified Pension Scheme (UPS) in Q&A Form to the best of information available in the Public Domain as of now. We will continue to update the information in this article with more information coming into Public Domain.

For Scenario Analysis between NPS and UPS based on different combinations along with Dynamic Calculator including all possible attributes, please read at :

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Question-1: What will be the contribution Rate of Central Government Employees and Government in Unified Pension Scheme.

Answer-1: There will be two kind of Accounts to be opened in Unified Pension Scheme:

Individual Pension Account: This account will be mapped to individual employee with its PRAN. In this account both Central Government Employees and Central Government will contribute monthly @ 10% of (Basic plus DA) respectively. Amount of contribution in this account will be fixed i.e. 10% only.

Reserve Pool Account: This will be common pool of resources in which Government alone will contribute monthly @ 8.5% of (Basic plus DA) as of now. Requirement of Contribution in this fund will be assessed every three years and accordingly, contribution may increase or decrease. In our opinion this fund will be used to fund the Gap between Assured Pension and the Annuity accrued from Individual Pension Account.

Question-2: What will be the Assured Pension Amount in Unified Pension Scheme with the help of illustrations.

Scenario-1 (When Service is 25 years or more): In this Case, Assured Pension Amount will be 50% of Average Basic of Last 12 months preceding date of superannuation.

For Example:

Basic Salary on Date of Superannuation: Rs. 1,03,000 (30.09.2024)

Basic Salary in July & August: Rs.1,03,000 (1st July being date of increment)

Basic Salary from Jan to June: Rs.1,00,000 (1st January being date of promotion)

Basic Salary from Oct to December: Rs.90,000

Average Basic Salary of Last 12 months: (1,03,000*3+1,00,000*6+90,000*3)/12

: 98,250

Assured Pension= 98,250*0.50

= Rs.49,125/-

Scenario-2 (When Service is 10 years or more but less than 25 Years): In this Case, proportionate reduction in assured pension will be there based upon years of service subject to minimum pension of Rs.10,000 per month.

Scenario-3 (When Service is less than 10 years): No Minimum pension nor assured pension.

Question-3: Whether Dearness Relief will also be there on Assured Pension.

Answer: Yes over and above Assured Pension, Minimum Pension and Family Pension, Dearness Relief as being calculated based on AICPI-IW will be provided.

Question-4: Whether Pension will be Revised based on Recommendations of Future Pay Commissions after retirement of Employee like in case of Old Pension Scheme.

Answer: As per information available, Assured Pension will not be revised based on future Pay Commissions after retirement of Employee.

Question-5: What would be other payments to be made to the Employees at the time of retirement.

Answer: At the time of Retirement, apart from Gratuity and Leave Encashment, following payment will also be made to the Central Government Employees:

Lump Sum Payment equal to 1/10 of monthly (Basic and DA) at the time of superannuation for each completed six month of service. This will not reduce the Assured Pension committed as per details in Qns-2 above.

For Example:

Basic Salary at the time of Superannuation: Rs. 1,00,000/-

DA at the time of Superannuation: Rs.50,000/-

Service Period: 30 Years 3 months

Lump Sum Payment= (1,50,000)*10%*60

= Rs. 9,00,000/-

Question-6: Can I withdraw any amount from Retirement Fund at the time of retirement?

Answer-6: As per information available in public domain, amount up to maximum of 60% can be withdrawn from Individual Pension Account (Fund accumulated from 10% contribution each from Self and Government. In that case, proportionate reduction in assured pension amount will be there.

For instance, If we decide to withdraw 50% of Individual Pension Fund at the time of retirement, assured pension will be 25% of Average Basic of Last 12 months preceding date of superannuation.

Question-7: Would Assured Pension will be available in case of VRS ?

Answer-7: Yes Assured Pension benefits will be available to the officers opted for VRS from the Government service based on tenure of the service as explained above. However, in case of VRS, Pension will start from the actual day of superannuation.

For instance, if One is due for superannuation on 31.08.2050 but he took VRS on 31.08.2044 after completion of 25 years of service. In this case, he will be eligible for 50% of average basic of 12 months at the time of VRS (31.08.2044), but payable from September-2050.

Question-8: What would be the benefits available to the spouse in case of Death of the Employee?

Answer-8:

Death during Service:

In case unfortunately death of Employee happened during service, as of now there is no clarity on this aspect. However, in our opinion, in this case benefit of old pension scheme may be granted like has been granted in case of NPS.

Death after Retirement: In this case, Family Pension equivalent to 60% of the Pension amount has been assured along with Dearness Relief.

Question-9: Whether UPS will be optional or mandatory?

Answer-9: It will be mandatory for all employees for whom recruitment notice/joining will be after 01.04.2025. For existing NPS employees, it will be optional and one time option will be given to choose between NPS and UPS.

Question-10: Can I select my investment choice (like equity percentage etc.) for investment of pension fund or there will be default investment choice ?

Answer-10: As per information in public domain, there will be one default investment choice but Employee will be allowed to opt for active choice of investment for his Individual Pension Account.

In case, Pension from Individual Pension account (Lest Say Rs. 110) will be more than assured pension (lets say Rs. 100) , Employee will be allowed to retain the same (Rs. 110). In case, Pension from Individual Pension account will be less than assured pension (lets Rs. 90), benefit from Government will be limited to (Assured Pension (100)- Pension from Default scheme (Rs.96) In this case his pension amount will be Rs. 90+Rs.4= Rs. 94..

However, there is no clarity for the case when Pension from active choice is less than assured pension but more than default choice (Rs. 98). Whether in that case, pension will be limited to assured pension (Rs. 100) or it will be like: 98+(100-96)= Rs. 102. In our opinion, clarity will be provided during detailed notification of the guidelines.

Question-11: What will happen to the officers who have already retired from the Government service?

Answer-11: All employees who have already retired from service under NPS can take benefit of UPS. Arrears will be paid to them as per calculation methodology of UPS after adjusting the benefits already withdrawn by them under NPS.

Question-12: What will happen to the fund after death of both Employee and Spouse.

Answer: Under NPS, the fund against which annuity is purchased is given to heirs of the Employee after death of both Employee and the spouse.

In our opinion, the same should also be allowed under UPS. However, as per media reports fund will not be returned to the heirs of employees after death of Employee and spouse. It will put the UPS to a great disadvantage as compared to NPS especially for the Employees whose life expectancy is not more.

However, in case, fund is allowed to be returned after death of both Employee and Spouse, UPS will be even better than OPS as far as return of Government contribution to the heir of the Employees which was not allowed in OPS.

Quesiton-13: Whether shifting to UPS is beneficial from NPS who has long service lets say 30 Years.

Answer: Financially considering the return of the fund to the heirs of Employees in NPS, UPS may not be financially beneficial in many of the cases.\

However, considering the social security the UPS provides during life time of Employee and Spouse, in our opinion, UPS is beneficial combined with withdrawal of fund in the range of 40-50% at the time of retirement.

For Complete Scenario Analysis between UPS and NPS along with dynamic Calculator on NPS & UPS including all possible attributes like annual increase in salary, life expectancy of Self and spouse, inflation etc., Please read at :