In a significant move affecting thousands of Central Government employees, the Department of Pension and Pensioners’ Welfare (DoPPW) has issued a formal Office Memorandum (OM) outlining instructions for Central Government employees who have opted for the Unified Pension Scheme (UPS). The instructions specifically relate to those who die in service or are discharged on account of invalidation or disablement.
This follows the introduction of the Unified Pension Scheme (UPS) as a one-time option under the National Pension System (NPS) for new recruits to Central Government civil services, effective from April 1, 2025.
Background: What Is the Unified Pension Scheme (UPS)?
The Unified Pension Scheme, notified by the Ministry of Finance, Department of Financial Services (Notification No. FS-1/3/2023-PR dated 24.01.2025), provides a new pension framework for Central Government employees. It serves as a hybrid model that seeks to offer enhanced flexibility and security to employees while maintaining sustainability in pension funding.
Employees covered under the NPS are given a one-time opportunity to opt into the UPS, which introduces several enhancements in benefits and structure. However, this shift raised questions about the applicability of legacy pension benefits in exceptional cases such as death or invalidation.
Latest Guidelines from DoPPW: OM Dated 18.06.2025
In response to concerns and for greater clarity, the Department of Pension and Pensioners’ Welfare issued OM No. 57/01/2025-P&PW(B)/UPS/10498 on June 18, 2025. The OM provides crucial instructions regarding the option to avail the benefits of the Old Pension Scheme (OPS) under two key rules:
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CCS (Pension) Rules, 2021
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CCS (Extraordinary Pension) Rules, 2023
These benefits are applicable in two specific scenarios:
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Death of a Government employee while in service
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Discharge from service due to invalidation or disablement
What This Means for Central Government Employees
Employees who have opted for the UPS can still choose to be covered under the Old Pension Scheme in the event of death or discharge on medical grounds. This includes entitlement to family pension, disability pension, and other ex-gratia benefits as applicable under the CCS rules.
However, in order to claim this benefit, the employee (or in the case of death, the family/dependents) must:
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Submit an option form in the prescribed format, attached with the OM
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Ensure submission to the concerned Ministry/Department in a timely manner
This decision provides additional security and flexibility for employees who may otherwise be at a disadvantage under contributory pension models during unforeseen tragedies.
Key Points to Note:
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The option is only for those covered under the UPS, not for regular NPS subscribers.
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The OM does not affect the general structure of UPS, but creates exceptions in compassionate cases.
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The option must be exercised formally and submitted in writing.
Significance of the Move
This step by the Department is being seen as a pro-employee measure, ensuring that financial security is maintained for the families of Government servants in case of untimely death or permanent disability. It reflects a balanced approach between reform and compassion, addressing concerns raised during the transition from OPS to NPS/UPS.
Experts note that this will encourage more employees to consider UPS, knowing that old-age and extraordinary pension protections will not be completely lost under extreme circumstances.
The Unified Pension Scheme represents a modernization of India’s pension infrastructure for Government employees, but the latest clarification ensures that humanitarian safeguards remain intact. With clear instructions now issued for accessing OPS benefits in specific cases, employees and their families can make informed decisions with greater confidence.
