Blitz Bureau
The Pension Fund Regulatory and Development Authority (PFRDA) has introduced extensive regulations for operationalising the much-awaited UPS, or Unified Pension Scheme, through a gazette notification. The scheme, effective April 1, will be introduced as an option for all Central Government employees who are covered under NPS, or the National Pension Scheme.
Eligible employees
As per the notification, the following Central Government employees are eligible to participate in UPS:-
• A current employee, i.e. one in service as of April 1, 2025, who is already covered under NPS.
• New recruits in services, on or after April 1, 2025. They are required to opt for the same within 30 days of joining.
• An employee who was covered under NPS and who has superannuated or voluntarily retired or has retired under Fundamental Rules 56(j) (which is not treated as penalty under Central Civil Services (Classification, Control and Appeal) Rules, 1965), on or before 31st March 2025.
• Legally wedded spouse in case of a subscriber who has superannuated or retired and has died before exercising the option for UPS.
An employee who opts for UPS shall not be entitled to and cannot claim any other policy concession, policy change, financial benefit, any parity with subsequent retirees, etc. later, including post-retirement.
After submitting requisite forms and getting due authorisation from the concerned PAO (Pay and Accounts Officer), the UPS subscriber will be identified by his erstwhile PRAN, tagged to UPS. In addition to their UPS account, these subscribers can have an additional account under NPS (Tier I and Tier II) voluntarily under the ‘All Citizen’ model.
Monthly contributions
As noted in the gazette, “the monthly contribution of the UPS subscriber shall be ten per cent of the basic pay (including non-practising allowance, where applicable) and dearness allowance thereon, which shall be credited to the individual PRAN of the UPS subscriber.”
This will be matched by the Central Government, which will credit an equal amount to the individual PRAN of the UPS subscriber.
Further, the Central Government will also provide an additional contribution of an estimated 8.5 per cent of (basic pay + Dearness Allowance) of all employees who have chosen the UPS option. This is for supporting assured payouts under the UPS option.
The minimum guaranteed payout under UPS shall be Rs 10,000/month, subject to completion of a minimum of ten years of qualifying services by a UPS subscriber.
Investments under UPS
As the notification explains, “UPS Subscriber shall have the choice of default pattern of pension fund(s) and default investment.”
A UPS subscriber can also choose from any of the pension funds registered with PFRDA. In case they do not actively make this choice, they will be deemed to have chosen the default pattern. Subscribers shall have an option to change the choice of pension fund once in a financial year and investment choice twice in a financial year.
A UPS subscriber exercising choice of pension fund other than the default pattern, shall choose any one of the following investment choices:
(i) Invest one hundred percent of the funds in Government securities (Scheme G)
(ii) Invest in any one of the following life cycle-based schemes:
(A) Conservative Life Cycle Fund with maximum exposure to equity capped at twenty-five percent.
(B) Moderate Life Cycle Fund with maximum exposure to equity capped at fifty percent.
Withdrawals from UPS
One could withdraw up to 25 per cent of one’s own contributions after completion of a lock-in period of three years from the date of enrolment under UPS or NPS, whichever is earlier.
These withdrawals can only be made a maximum of 3 times. In ordinary circumstances, one could make withdrawals for “the purchase or construction of a residential house or flat in his or her name or in a joint name with his or her legally wedded spouse.”
However, in case the subscriber already owns, either individually or in the joint name, a residential house or flat, other than ancestral property, no withdrawal under these regulations shall be permitted.
Moreover, if a Central Government employee has been on deputation or foreign service for which applicable contribution has not been received under the individual corpus and the pool corpus, this period will not be considered for qualifying service, for which a minimum of 10 years is required.
