Key Points
- The Department of Pension and Pensioners’ Welfare has notified the new Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025.
- Under these rules, central government employees who opt for the Unified Pension Scheme (UPS) can take Voluntary Retirement (VRS) after 20 years of qualifying service.
- However, the full assured pension payout is available only after completing 25 years of service.
- Employees taking VRS between 20 and 25 years of service will receive a pro-rata pension, calculated based on the number of years served.
- The actual pension payout, whether full or pro-rata, will only commence from the date of superannuation (the employee’s regular retirement age).
New Delhi: In a significant update for central government employees, the Department of Pension and Pensioners’ Welfare has introduced new rules allowing for voluntary retirement (VRS) after 20 years of service for those covered under the Unified Pension Scheme (UPS). The Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025, were officially notified on September 2, 2025, providing more flexibility for employees planning their retirement.
While the new rules permit an earlier exit, they come with a crucial condition regarding the pension payout. The full assured pension benefit will only be granted to employees who complete a minimum of 25 years of qualifying service.
Understanding the Pro-Rata Payout System
The most critical change is the introduction of a pro-rata system for employees who retire before completing the 25-year service mark. Here’s how it works:
- VRS after 20 years: An employee can apply for and be granted voluntary retirement after completing 20 years of service.
- Pro-rata pension calculation: If an employee retires with more than 20 but less than 25 years of service, their pension will be calculated proportionally. For example, an employee who takes VRS after 22 years of service will be eligible for 22/25ths (or 88%) of the full pension amount they would have received after 25 years.
- Delayed Payout: The actual payment of this assured pension (whether full or pro-rata) will only begin when the employee reaches their age of superannuation (the standard retirement age).
Other Retirement Benefits Remain Intact
According to a statement from the Ministry of Personnel, Public Grievances and Pensions, other retirement benefits are not affected by the pro-rata pension rule. Upon taking VRS, employees can still avail benefits such as :
- Final withdrawal of 60% of their Individual Corpus from the National Pension System (NPS).
- Retirement gratuity and leave encashment.
- Central Government Employees Group Insurance Scheme (CGEGIS) benefits.
Furthermore, the rules provide a safety net for families. If a subscriber passes away after taking VRS but before their pension payout begins at the age of superannuation, their legally wedded spouse will be granted a family payout starting from the date of the subscriber’s death. This new framework aims to offer employees more flexibility in their career paths while structuring pension benefits to incentivize longer service.
