Central Government Employees: What Happens to Pension After Resignation Under UPS

Department of Pension and Pensioners’ Welfare (DoPPW) has issued a new clarification explaining how resignation affects benefits under the Unified Pension Scheme (UPS), which came into effect on April 1, 2025. The update provides clear guidance on pension entitlement, corpus disbursement timelines, and the option to switch between UPS and NPS for central government employees.

Central Government Employees: What Happens to Pension After Resignation Under UPS

Clarification on Resignation Rules

According to the Office Memorandum dated October 29, 2025, any employee who resigns under UPS will lose their right to the assured payout.

This rule aligns with the provisions of the National Pension System (NPS).
However, employees will still receive the accumulated pension corpus as a lump sum payment.
The only exception applies if the resignation is withdrawn in the public interest, in which case benefits may be restored.

This means that while employees will not get the guaranteed pension, they will still receive the savings they have accumulated.

Timeline for Corpus Disbursement

The DoPPW notice also explains that the pension corpus will be disbursed 90 days after the effective date of resignation.
This timeline ensures proper verification and administrative processing.

If the employee dies before 90 days, the corpus will be transferred to the spouse or legal heir as per existing pension rules.
This safeguard ensures that family members are financially protected even if the subscriber passes away before payment.

Option to Switch Between UPS and NPS

Employees covered under UPS can switch to NPS only once during their service. The switch is allowed:

Within 12 months before superannuation,
3 months before voluntary retirement, or
At the time of resignation or compulsory retirement (under Fundamental Rule 56(j)).

Once switched, employees will receive a 14% employer contribution under NPS but will lose the assured payout offered by UPS.
This makes the decision irreversible, and employees are advised to think carefully before opting for the switch.

Financial Impact and Expert Advice

The circular stresses the financial impact of resignation under the new UPS.
While flexibility in corpus withdrawal remains, losing the assured payout can affect post-retirement financial stability.
Experts suggest that employees should:

Avoid impulsive resignations,
Evaluate long-term financial goals, and
Consult pension authorities before switching or resigning under the UPS framework.

The clarification aims to help employees make well-informed retirement decisions.

Exam-Oriented Notes

The Unified Pension Scheme (UPS) started on April 1, 2025.
Resignation leads to loss of assured payout, but the accumulated corpus remains payable.
Corpus disbursement occurs 90 days after resignation.
Switching from UPS to NPS is allowed once, under specific conditions.
NPS switch gives 14% employer contribution, but removes UPS benefits.

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Question & Answer

Q1. The Unified Pension Scheme (UPS) came into effect from which date?
(a) January 1, 2025
(b) April 1, 2025
(c) July 1, 2025
(d) October 1, 2025
Answer: April 1, 2025

Q2. What happens to the assured payout if an employee resigns under UPS?
(a) It is doubled
(b) It remains unchanged
(c) It is forfeited
(d) It is deferred for five years
Answer: It is forfeited

Q3. After how many days is the pension corpus paid following resignation under UPS?
(a) 30 days
(b) 60 days
(c) 90 days
(d) 120 days
Answer: 90 days

Q4. If a UPS subscriber dies before 90 days of resignation, who receives the corpus?
(a) Employer
(b) Treasury department
(c) Spouse or legal heir
(d) Central pension fund
Answer: Spouse or legal heir

Q5. What is the employer’s contribution percentage when switching from UPS to NPS?
(a) 10%
(b) 12%
(c) 14%
(d) 16%
Answer: 14%

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