Big option for railway employees! A chance to switch from NPS to UPS; find out the new rules regarding pension and VRS..

The Central Government issued a notification on Wednesday clarifying all guidelines regarding the Unified Pension Scheme (UPS) for railway employees, thereby resolving uncertainties surrounding pension options. Under the new rules, railway employees who complete a minimum of 25 years of qualifying service will receive an assured pension amounting to 50% of their average basic pay drawn during the 12 months immediately preceding retirement. Additionally, existing employees currently covered under the National Pension System (NPS) will be granted a one-time option to switch to the UPS.

The new guidelines also clarify the pension status for employees opting for Voluntary Retirement (VRS). An employee taking voluntary retirement after completing the minimum service period will be eligible for the assured pension; a minimum pension of ₹10,000 will be provided upon completion of 10 years of service, while the full pension amount becomes available after completing 25 years of service. Furthermore, in the event of the employee's death, the family will receive 60% of the pension along with the benefit of Dearness Relief. The Central Government has launched the UPS (as an alternative to NPS) effective from April 1, 2025. Various government departments are implementing the UPS in a phased manner, and the Railways has now introduced this pension scheme for its employees as well.

Which railway employees are eligible for the UPS?
The UPS covers railway employees who were appointed on or after January 1, 2004, and fall under the ambit of the NPS. According to the notification, casual or daily-wage laborers, contractual employees, and specific categories of employees governed by other pension scheme rules are not eligible to join the UPS.

**Contributions to the UPS Corpus by Employees and Employers**
Railway UPS subscribers are required to deposit 10% of their basic salary and Dearness Allowance (DA) into their personal UPS accounts every month. This contribution continues even if the employee is on probation or on deputation to a Central or State Government department. The Railways will also contribute an amount equivalent to 10% of the employee's basic pay and DA to their UPS corpus. In accordance with Pension Fund Regulatory and Development Authority (PFRDA) rules, the government also deposits approximately 8.5% of the basic pay plus DA into the pooled corpus that funds the assured pension payable to employees upon retirement.

**Pension Amount for Railway Employees under UPS**
According to the notification, employees will receive a full guaranteed pension upon completing 25 years of service; this amount will be 50% of the average basic pay drawn during the 12 months preceding retirement. If the service duration is between 10 and 25 years, the employee's payout will be reduced proportionately.

**Family Pension for Railway Employees under UPS**
As per the notification, the family pension will be payable to the legally wedded spouse upon the employee's retirement or superannuation. The family pension payout will amount to 60% of the full pension.

**Pension after Opting for Voluntary Retirement Scheme (VRS)**
The UPS rules for railway employees allow them to opt for voluntary retirement after completing 20 years of service. The pension payout will depend on the number of years of service. If an employee takes VRS after completing 25 years of service, the pension will be 50% of the average basic pay drawn during the 12 months before retirement. If the service period is less than 25 years, the employee will receive a pro-rata guaranteed payout. Under UPS, if an employee opts for Voluntary Retirement (VRS), their annuity payout will commence upon reaching the age of superannuation, rather than immediately after voluntary retirement.

**UPS Pension in case of resignation by a railway employee**
In the event of a standard resignation, the entitlement to a guaranteed pension under UPS ceases. The employee will receive the accumulated pension amount from their individual corpus as a lump sum. The same rule applies in cases of dismissal or removal from service. In cases of compulsory retirement, the payout amount cannot be less than two-thirds of the full payout, nor can it exceed the full payout. UPS benefits will not be forfeited if the resignation is tendered with due permission to take up another job under the Central Government.

**UPS Pension in the event of a railway employee's death**
In this scenario, the applicable UPS benefits will depend on the chosen option and the specific circumstances. If an employee passes away after completing 15 years of service without having opted for UPS, the family may still be eligible for pension benefits under the prevailing railway pension rules, subject to specific conditions.

**Switching from UPS to NPS for railway employees**
A railway employee wishing to switch from UPS to NPS may do so once during their service tenure. Once NPS is selected, reverting to UPS is not permitted. Upon opting for NPS, the government's contribution to the employee's NPS corpus will be 14% of their basic pay.

**Categories ineligible to switch from UPS to NPS**
Within 12 months before retirement
Within three months before voluntary retirement
In certain situations involving resignation or compulsory retirement
When departmental or judicial proceedings are ongoing or pending.
Dearness Relief will be applicable to the UPS pension.

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