Entitlement Rules for Central Government Employees Under Unified Pension Scheme (UPS) Upon Absorption in PSUs or Autonomous Bodies
The Department of Pension and Pensioners’ Welfare (DoPPW) has issued an important Office Memorandum (OM No. 57/03/2022-P&PW(B)/8361(4)), dated 29th October 2025, clarifying the entitlement of Central Government employees who have opted for the Unified Pension Scheme (UPS) under the National Pension System (NPS) and are later absorbed in or under corporations, companies, or autonomous bodies.
This update plays a crucial role in guiding how pension benefits are to be managed when such employees move from Central Government service to other organizations like Public Sector Undertakings (PSUs) or autonomous/statutory bodies.
Key Provisions of the Office Memorandum
1. Background – Unified Pension Scheme (UPS)
The Central Civil Services (Implementation of Unified Pension Scheme under NPS) Rules, 2025 govern the service and pension-related matters of Central Government employees covered under UPS. These rules merge the flexibility of NPS with certain assured pension benefits, ensuring long-term financial stability for employees.
2. Rule 16 – Entitlement on Absorption in Other Bodies
Rule 16 of these rules provides a clear framework for employees opting for UPS who are later absorbed into corporations, companies, or bodies owned, controlled, or financed by the Central or State Government.
👉 If Absorbed Before Completing 10 Years of Service:
- The employee is deemed retired from government service on the date of absorption.
- They will receive their accumulated pension wealth under UPS as a lump-sum payment.
- This payment will follow the regulations notified by the Pension Fund Regulatory and Development Authority (PFRDA).
👉 If Absorbed After Completing 10 Years of Service:
- The employee will be entitled to the assured pension payout as applicable in cases of superannuation.
- Benefits will be provided as per the PFRDA (Operationalisation of UPS under NPS) Regulations, 2025.
3. Option in Case of Departmental Conversion
In cases where a Central Government department is converted into a Public Sector Undertaking (PSU) or an autonomous body, employees covered under UPS are given two options:
(i) Opt for Retirement:
- The employee may retire from government service based on the qualifying service before conversion.
- If the qualifying service is 10 years or more, they can receive benefits as in the case of superannuation under UPS.
(ii) Continue in the New Organization:
- The employee can continue to serve in the PSU or autonomous body.
- In such cases, the pension benefits will be based on combined qualifying service (Government + PSU).
- The Central Government will specify the mechanism for payment of UPS benefits for such cases.
4. Implementation by All Ministries and Departments
All Ministries, Departments, and Organizations have been instructed to bring these provisions to the notice of officials handling UPS/NPS matters. This ensures uniform implementation and awareness among Central Government offices and their subordinate units.
Why This Matters
This OM ensures clarity, fairness, and transparency for government employees under the Unified Pension Scheme, especially those transitioning to PSUs or autonomous bodies. It balances employee interests by:
- Guaranteeing pension security after absorption,
- Providing flexible retirement options, and
- Aligning with the latest pension regulatory framework under PFRDA.