Unified Pension Scheme (UPS) Update: Resignation May Lead to Loss of Assured Pension Benefits
A major update has been issued by the Department of Pension and Pensioners’ Welfare (DoPPW) regarding the Unified Pension Scheme (UPS), which was introduced for central government employees earlier this year. The department has clarified that employees who resign from their government service under this scheme will lose their right to receive the assured or guaranteed pension payout. However, they will still be entitled to the pension amount accumulated in their account, which will be paid as a lump sum.
According to an official memorandum released by DoPPW on October 29, 2025, employees who opt for the Unified Pension Scheme (UPS) under the National Pension System (NPS) framework will not be eligible for the guaranteed pension benefit if they resign from their service.
The department made it clear that resignation will be considered as a voluntary exit from service, and in such cases, the assured payout component—essentially the guaranteed monthly pension after retirement—will stand forfeited.
However, employees will still have the right to withdraw the entire accumulated corpus in their pension account. This amount will be disbursed within 90 days of the employee’s formal release from service, marking the completion of all exit formalities.
The memorandum also addresses this sensitive scenario. If an employee who has resigned passes away within 90 days of resignation, the entire pension balance will be paid to their legally wedded spouse.
If no spouse is alive, the legal heir of the deceased employee will receive the full accumulated pension corpus. This clause ensures that the employee’s savings are protected and passed on to the rightful beneficiary.
The Unified Pension Scheme (UPS) is a new initiative by the Central Government, implemented from April 1, 2025. It serves as an alternative option within the National Pension System (NPS) for government employees.
UPS combines the best aspects of both traditional and modern retirement planning models. On one hand, it provides an assured payout—a guaranteed pension amount to ensure post-retirement financial stability. On the other, it retains the market-linked flexibility of NPS, allowing employees to benefit from investment growth during their service period.
In essence, the scheme aims to balance security and flexibility, ensuring that employees enjoy both predictable pension benefits and the potential for higher returns from market-based investments.
Resignation leads to cancellation of assured pension: If an employee resigns, the guaranteed pension benefit under UPS is forfeited.
Full withdrawal of corpus allowed: Employees can still withdraw their entire accumulated pension amount as a lump sum after leaving the service.
90-day settlement window: The payout process begins only after 90 days of formal resignation.
Protection for family members: In case of death within 90 days of resignation, the pension amount will go to the spouse or legal heir.
Hybrid scheme advantages: UPS merges fixed pension assurance with NPS-style market-linked savings.
The government’s clarification brings much-needed transparency to how the Unified Pension Scheme will function in the event of an employee’s resignation. While the forfeiture of assured pension benefits may seem like a setback, the scheme still ensures that employees and their families retain full rights over their accumulated savings.
For central government employees, this highlights the importance of understanding the fine print before opting for UPS. Knowing the implications of resignation and retirement under this new hybrid model will help ensure financial planning and pension security for the future.
