Unified Pension Scheme: Revised Guidelines on Pension Forfeiture for Resigned Employees

The Department of Pension and Pensioners’ Welfare (DoPPW) has issued a detailed clarification on the entitlement of central government employees under the Unified Pension Scheme (UPS) in case of resignation. The notification explains the impact of resignation on assured payouts and pension wealth under the new framework, which came into effect from April 1, 2025.

DoPPW Clarification on Resignation

As per the Office Memorandum issued on October 29, 2025, employees who resign from government service under the UPS will lose their right to the assured payout. The rule, aligned with the provisions of the National Pension System (NPS), states that resignation—unless withdrawn in public interest—will entail forfeiture of the guaranteed benefits. However, the accumulated pension corpus will still be paid out as a lump sum amount.

Timeline for Corpus Disbursement

The DoPPW has outlined that the lump sum payment of the accumulated pension wealth will be processed only after 90 days from the effective date of resignation. This ensures administrative verification and compliance with pension authority guidelines. If a subscriber passes away before the completion of 90 days, the accumulated amount will be transferred to the spouse or legal heir, as per the existing regulations.

Switching Between UPS and NPS

Employees covered under the UPS can opt for a one-time, one-way switch back to the NPS during their service tenure. The option is available within twelve months before superannuation, three months before voluntary retirement, or at the time of resignation or compulsory retirement under Fundamental Rule 56(j). Once switched, employees become eligible for a 14% employer contribution under NPS but forfeit the UPS’s assured payout benefits.

Exam Oriented Facts

• The Unified Pension Scheme (UPS) came into effect from April 1, 2025.
• Resignation under UPS leads to forfeiture of the assured payout but not of the accumulated corpus.
• Lump sum payment of the pension corpus is made 90 days after resignation.
• Switching back to NPS is allowed once during service under prescribed conditions.

Financial Impact on Central Government Employees

The circular highlights the critical financial implications of resignation for UPS subscribers. While the system ensures flexibility through corpus withdrawal, the loss of an assured payout could significantly affect post-retirement financial security. Experts advise employees to carefully evaluate long-term retirement goals before considering resignation or switching schemes under the unified pension framework.