📰 Effect of Compulsory Retirement under UPS: Key Rules Explained (OM dated 29 Oct 2025)
The Department of Pension and Pensioners’ Welfare (DoPPW) has issued a new Office Memorandum (No. 57/03/2022-P&PW(BY/8361(5)) dated 29th October 2025, clarifying the effect of compulsory retirement from Government service as a penalty on the Assured Payout under the Unified Pension Scheme (UPS) for Central Government employees covered under the National Pension System (NPS).
This update comes as part of the Central Civil Services (Implementation of Unified Pension Scheme under the National Pension System) Rules, 2025, which govern service-related matters for employees who have opted for the Unified Pension Scheme.
🔍 What the OM Says
According to Rule 20 of the newly notified UPS Rules, if a Central Government employee who has opted for the Unified Pension Scheme (UPS) is compulsorily retired from service as a penalty, they will still be eligible for an Assured Payout — though at a reduced rate.
The competent authority may grant not less than two-thirds and not more than the full admissible payout from the employee’s individual pension corpus under the UPS.
💰 Payout Will Follow PFRDA Regulations
The OM clarifies that such payouts will be made in accordance with the Pension Fund Regulatory and Development Authority (PFRDA)’s Operationalisation of Unified Pension Scheme under National Pension System Regulations, 2025.
This ensures that the implementation and disbursement process remains standardized across all ministries and departments.
🏛️ Consultation with UPSC Required for Reduced Benefits
In cases where the President decides to award less than the full payout (whether in original, appeal, or review orders), the Union Public Service Commission (UPSC) must be consulted before such orders are passed.
This safeguard ensures fairness and due diligence in disciplinary cases leading to compulsory retirement.
🎓 Gratuity Payment Not Affected
The order under this rule is independent of gratuity benefits.
Any gratuity payable under the Central Civil Services (Payment of Gratuity under NPS) Rules, 2021 will continue to be granted separately, even if an employee is compulsorily retired.
⚖️ Minimum Assured Payout Guarantee
Importantly, the assured payout in case of compulsory retirement cannot be less than the minimum payout admissible under the Unified Pension Scheme.
This ensures a financial safeguard for employees even when they face the penalty of compulsory retirement.
🗂️ Implementation Across Ministries and Departments
All Ministries, Departments, and subordinate offices have been directed to strictly implement these provisions and bring them to the attention of officers handling NPS and UPS matters.
🧭 In Summary
| Aspect | Details |
|---|---|
| Rule Reference | Rule 20, CCS (UPS under NPS) Rules, 2025 |
| Applies To | Central Govt Employees under Unified Pension Scheme |
| Penalty Case | Compulsory Retirement |
| Assured Payout Range | Minimum two-thirds to full admissible payout |
| Authority to Decide | Competent authority imposing the penalty |
| UPSC Consultation | Mandatory if payout < full benefit |
| Gratuity | Governed separately under CCS (Gratuity under NPS) Rules, 2021 |
| Minimum Payout | Cannot be below the minimum admissible under UPS |