Unified Pension Scheme (UPS): Centre issues fresh clarification on Voluntary Retirement rules

The Department of Pension and Pensioners’ Welfare (DoPPW) has issued a detailed clarification on voluntary retirement provisions under the Unified Pension Scheme (UPS), aimed at central government civil employees currently covered under the National Pension System (NPS). The move comes as part of the government’s broader effort to streamline the new pension framework and provide greater clarity to employees ahead of the November 30, 2025, deadline for opting into the UPS.

The Centre recently notified the Central Civil Services (Implementation of Unified Pension Scheme under the National Pension System) Rules, 2025, which will govern all service-related aspects of central government civil employees covered under the UPS. The scheme, which became effective from April 1, 2025, is designed to include approximately 23 lakh central government civil employees who were earlier under the NPS. However, it does not extend to other categories of government workers or those outside the NPS ambit.

Under the UPS, employees are allowed to take voluntary retirement (VRS) after completing 20 years of regular service, subject to a minimum notice period of three months. According to the Office Memorandum (OM) issued by the DoPPW, “Rule 13 provides that any subscriber who has completed twenty years of regular service may, by giving notice of not less than three months in writing to the appointing authority, retire from the service.”

However, the rule also stipulates that the notice of voluntary retirement requires acceptance from the appointing authority. If the authority does not explicitly refuse permission before the notice period expires, the retirement will automatically become effective on the expiry date.

The DoPPW further clarified that employees may seek approval for a shorter notice period under certain circumstances. A government servant may make a written request for curtailing the three-month notice period, citing valid reasons. The appointing authority may approve this request if satisfied that such curtailment will not lead to administrative inconvenience.

Once a notice for voluntary retirement has been submitted, it cannot be withdrawn unless the appointing authority specifically approves such withdrawal. Importantly, any withdrawal request must be made at least 15 days before the intended date of retirement, according to the OM.

The new rule does not apply to employees who retire under the special voluntary retirement scheme for surplus employees issued by the Department of Personnel and Training (DoPT), nor to those retiring for absorption in autonomous bodies or public sector undertakings (PSUs).

In terms of benefits, the DoPPW clarified that a subscriber who retires before completing 25 years of qualifying service will receive a pro-rata assured payout under the Pension Fund Regulatory and Development Authority (PFRDA) regulations. Conversely, employees completing 25 years or more will be eligible for the full assured payout as defined under the PFRDA’s Operationalisation of UPS under NPS Regulations, 2025.

The government has directed all ministries and departments to ensure strict implementation of these provisions and to disseminate the guidelines to personnel handling UPS and NPS matters across subordinate offices.
By setting out these clear parameters for voluntary retirement, the Centre aims to ensure transparency, predictability, and fairness in how employees transition under the new unified pension regime.