Gratuity, Pension : A bunch of rules for central government employees got updated in 2025. One of these changes is about the Unified Pension Scheme (UPS). Now, all central government employees who are part of the UPS can get retirement and death gratuity benefits under the Old Pension Scheme (OPS).
What’s the deal with the new order?
This year, the government rolled out a fresh order. It says that UPS employees will also qualify for retirement gratuity and death gratuity according to the Central Civil Services (Payment of Gratuity) Rules, 2021. If an employee passes away while on duty, their family will receive benefits similar to those provided under the Old Pension Scheme (OPS). Plus, if an employee becomes disabled or handicapped, they can opt for protected benefits akin to those under the OPS.
Recently, the government has given the green light to two new investment options – ‘Life Cycle’ and ‘Balanced Life Cycle’ – for central government employees participating in the National Pension System (NPS) and Unified Pension Scheme (UPS). Now, under NPS and UPS, central government employees have a variety of investment options to choose from. One is the default option, which follows the ‘default pattern’ of investment as set by the Pension Fund Regulatory and Development Authority (PFRDA) over time. The second option is Scheme-G, which invests entirely in government securities for low-risk, guaranteed returns.
What about the equity allocation in the life cycle option?
The Life Cycle (LC-25) option allows a maximum equity allocation of 25 percent, which gradually decreases from age 35 to age 55. The LC-50 option caps the equity allocation at 50 percent of the retirement corpus. The Balanced Life Cycle (BLC) option is a tweaked version of the LC50, where the equity allocation decreases from age 45, letting employees invest in equities for a longer stretch. The LC75 option permits a maximum equity allocation of 75 percent, which also gradually reduces from age 35 to age 55.