The Ministry of Railways has notified the rules for implementing the Unified Pension Scheme (UPS) for railway employees covered under the National Pension System (NPS), setting out provisions on eligibility, contributions, assured pension, voluntary retirement and switching back to the NPS.
Under the notified framework, eligible railway employees will be entitled to a minimum assured pension of Rs 10,000 a month after completing 10 years of qualifying service.
Employees completing 25 years of qualifying service will be eligible for the full assured pension, which will be equivalent to 50 per cent of their average basic pay during the final 12 months before superannuation. Employees with between 10 and 25 years of qualifying service will receive an assured pension on a proportionate basis.
The UPS was introduced by the central government under the NPS with effect from April 1, 2025. The Railways is among the latest departments to notify detailed rules for implementing the scheme for its eligible employees.
The scheme will cover railway employees appointed on or after January 1, 2004, who are covered under the NPS. However, casual and daily-wage workers, contract employees and employees governed by separate pension regulations will not be eligible to opt for the UPS.
Employees opting for the scheme will contribute 10 per cent of their basic pay plus dearness allowance (DA) every month to their individual UPS account. The Railways will make a matching contribution of 10 per cent of basic pay plus DA to the employee’s individual corpus.
In addition, the government will contribute an estimated 8.5 per cent of basic pay plus DA to a pool corpus used to provide assured pension benefits. The rules also provide for voluntary retirement after an employee completes 20 years of qualifying service.
For employees taking voluntary retirement after completing 25 years of service, the assured pension will be equivalent to 50 per cent of the average basic pay during the final 12 months before superannuation. Those with less than 25 years of qualifying service will receive the pension on a pro-rata basis.
However, pension benefits under VRS will not begin immediately upon retirement. The annuity will commence from the date on which the employee would otherwise have reached the normal age of superannuation.
Railway employees enrolled in the UPS will also have the option to switch back to the NPS once during their service. The decision will be irreversible, with employees not permitted to return to the UPS after exercising the option. For employees making the switch, the government’s contribution to the NPS account will be 14 per cent of basic pay.
The option cannot be exercised during the 12 months preceding superannuation or within three months before deemed voluntary retirement. It is also restricted in specified resignation and compulsory retirement cases and when departmental or judicial proceedings are pending or under consideration.
The UPS will also provide dearness relief on assured pensions, including family pensions, subject to applicable government rules and rates.
