The Ministry of Railways on Wednesday, September 23, notified the rules for implementing the Unified Pension Scheme (UPS) for its employees covered by the National Pension System (NPS). According to reports from Mint, the rules establish comprehensive framework covering eligibility requirements, employee and government contributions, pension calculation, lump-sum benefits, minimum and maximum pension provisions, Voluntary Retirement Scheme (VRS) rules and the process for switching from UPS to NPS. The UPS scheme was launched by the central government on April 1, 2025, with many central government departments implementing it one by one, and now the Railways has opened the pension scheme to its employees.
Under the notified framework, eligible railway employees will receive a minimum assured pension of ₹10,000 after completing 10 years of qualifying service. As reported by Mint, employees who have completed 25 years of service will be eligible for the full assured pension. The rules also allow eligible employees to seek voluntary retirement after completing 20 years of service. The full pension will be equivalent to 50% of the average basic pay earned during the final 12 months before superannuation. However, if service is between 10 and 25 years, the employee's payout will be proportionately reduced. The family pension will be provided to the legally wedded spouse as on the date of retirement or superannuation, with the admissible family pension payout being 60% of the full pension.
A railway employee subscribing to the UPS will contribute 10% of basic pay plus dearness allowance (DA) every month to their individual UPS account. According to Mint, the contribution requirement continues even when an employee is on probation or is deputed to a Central or state government department. The railways will make a matching contribution of 10% of the employee's basic pay and DA to the individual UPS corpus. As per a Pension Fund Regulatory and Development Authority (PFRDA) rule, the government also contributes an estimated 8.5% of basic pay + DA towards the pool corpus that provides assured pension to employees on retirement. Railway employees appointed on or after January 1, 2004, who are covered by the NPS are eligible to join the scheme, though casual and daily-wage employees, contract workers and certain employees governed by separate pension regulations will not be eligible.
The UPS framework provides for voluntary retirement after completing 20 years of qualifying service. As reported by Mint, an employee who takes voluntary retirement after completing 25 years of service will be entitled to an assured pension equal to 50% of the average basic pay during the final 12 months before superannuation. Employees opting for VRS will not begin receiving annuity immediately after leaving service, with benefits commencing from the date of normal age of superannuation. Railway employees enrolled in UPS can exercise the option to switch to the NPS once during their service, though this decision is irreversible and cannot be exercised during specified periods including 12 months preceding superannuation, three months before deemed voluntary retirement, certain resignation/compulsory retirement situations, and while departmental or judicial proceedings are pending.
The assured pension under UPS will receive dearness relief (DR) on the basic pension, with this provision also applying to family pension beneficiaries. According to Mint, the pension payout under UPS will have a mechanism to provide relief against inflation, subject to applicable government rules and rates. For employees switching to NPS, the government's contribution will be 14% of basic pay. The UPS will not be a fixed pension scheme as UPS subscribers also get dearness relief on their basic pension. The individual corpus in the UPS is defined as the investment by the employer and the return on it, with the net asset value of the units held in an employee's Permanent Retirement Account Number-linked UPS account serving as the individual corpus. The Benchmark Corpus is a notional reference corpus calculated using the default investment pattern and assuming regular UPS contributions without certain withdrawals.
