Major Relief for Central Govt Employees: Gratuity Now Aligned with Old Pension Scheme Rules

NEW DELHI: In a significant decision addressing a long-standing demand, the Central Government announced on Wednesday that employees under the Unified Pension Scheme (UPS) will now receive gratuity benefits calculated as per the Old Pension Scheme (OPS).

The Department of Pension and Pensioners’ Welfare, under the Ministry of Personnel, issued an official order to this effect, bringing parity in retirement benefits for millions of employees.

According to Union Minister of State for Personnel, Jitendra Singh, the move is aimed at ensuring uniformity and fairness in retirement benefits. As per the new order, employees who opted for the UPS will be eligible for gratuity under the OPS rules upon retirement, death in service, or job loss due to disability or disqualification.

The decision resolves a major disparity that arose after the introduction of the UPS in April this year. While the UPS was launched in August last year to address demands for higher pensions compared to the 2004 New Pension Scheme (NPS) by guaranteeing a pension equivalent to half the basic salary, its gratuity component was lower than that of the OPS. This new directive corrects that anomaly.

The order clarifies that employees under the UPS will be entitled to retirement gratuity and death gratuity as per the provisions of the Central Civil Services (Payment of Gratuity under National Pension System) Rules, 2021, which are aligned with the OPS.

The government estimates that this decision will benefit approximately 2.3 million (23 lakh) central government employees across the country.

The move has been widely welcomed by employee federations. Manjeet Singh Patel, President of the All India NPS Employees Federation, hailed the order as a “historic decision.”