The Department of Pension and Pensioners' Welfare issued memorandums on October 27 clarifying Unified Pension Scheme rules. Central government employees must make pension contributions during probation. However, staff can choose whether to contribute while under suspension. Those absent without pay do not have to make contributions for that specific period.
The latest instructions also cover delayed deposits, restoration of investment units and who processes retirement benefits for employees on deputation.
Central government employees covered by the Unified Pension Scheme (UPS) cannot skip pension contributions during probation. However, they can choose whether to contribute while under suspension. Those absent from duty without pay or leave salary will not have to make contributions, and the government will not contribute on their behalf for that period.
The Department of Pension and Pensioners' Welfare (DoPPW) has issued a series of office memorandums (OMs) dated October 27, clarifying how contributions should be handled in these situations. The instructions cover probation, suspension, absence from duty, delayed deposits and employees retiring while on deputation.
The clarifications are based on the Central Civil Services (Implementation of Unified Pension Scheme under the National Pension System) Rules, 2025. They are relevant for central government employees who have opted for UPS under the National Pension System (NPS).
UPS contribution during probation is compulsory
Employees covered by UPS must contribute to the scheme even during their probation period.
Rule 6(6) of the 2025 rules specifically provides for subscriber contributions during probation. The DoPPW has reiterated this requirement in its October 27 memorandum and asked ministries and departments to ensure its implementation.
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Therefore, a newly recruited employee cannot postpone pension contributions until confirmation of service or completion of probation.
Can employees stop UPS contributions during suspension?
Unlike probation, suspension gives employees the option of deciding whether to contribute to UPS.
Under Rule 6(2), an employee can choose to continue making contributions during the suspension period. However, the government's contribution is linked to this decision.
Rule 7(3) provides that the government will also contribute to the employee's individual pension corpus during suspension, taking into account the subsistence allowance paid during that period.
But if the employee opts not to contribute, the government will not make its contribution either.
There is another important provision for employees whose suspension is subsequently revoked or whose period of suspension is treated as duty or leave carrying leave salary.
In such cases, the employee's and government's contributions will be recalculated based on the emoluments the employee becomes entitled to for that period.
Any difference between the contribution payable and the amount already deposited will be credited to the employee's individual corpus. The adjustment will be calculated using the applicable net asset value (NAV) under the default investment pattern and the corresponding units on the last working day of the month in which the adjustment is made.
This means employees may receive an adjustment to their pension corpus if the final decision changes the treatment of their suspension period.
No contributions during absence without pay
Employees will not have to contribute to UPS during absence from duty, whether on leave or otherwise, if they are not entitled to pay or leave salary.
Rule 6(3) of the 2025 rules covers the employee's contribution, while Rule 7(2) deals with the government's contribution.
The provisions mean that neither side is required to contribute for a period during which the employee is not required to make a contribution under the rules.
However, employees should distinguish between unpaid absence and leave for which salary is payable. The latter is not automatically exempt from contributions.
Delayed UPS contributions: When can investment units be restored?
The government has also clarified how employees can be protected when pension contributions are deposited late for reasons beyond their control.
Under Rule 8(1), investment units that would have been credited to the employee's individual corpus in the absence of the delay can be restored.
The provision covers three situations:
Delay in enrolment: When an employee's enrolment in UPS is delayed beyond the prescribed time limit under Rule 4.
Delay in employee contributions: When the monthly contribution is not deducted from salary or credited to the individual corpus within the timeline under Rule 6.
Delay in government contributions: When the government's monthly contribution is not credited to the employee's corpus within the timeline under Rule 7.
The restored units will be calculated using the NAV of the default investment pattern and corresponding units on the last working day of the month in which the adjustment is made.
This provision is important because a delay in depositing contributions can affect the number of investment units accumulated in an employee's pension account.
Who processes UPS benefits if an employee retires on deputation?
The DoPPW has also clarified which authority will process UPS retirement benefits when an employee retires while serving on deputation.
Under Rule 27, the responsibility depends on the organisation where the employee is posted:
Deputation to another Central government department: The head of office of the borrowing department will authorise the retirement benefits.
Deputation to a State government: The head of office or cadre authority that sanctioned the deputation will handle the process.
Foreign service: The head of office or cadre authority that sanctioned the deputation will be responsible.
The clarification establishes which department or authority must handle retirement-related formalities when an employee is not serving in the parent department at the time of retirement.
For UPS subscribers, the latest instructions clarify that pension contributions depend on the employee's service status. While probation does not provide an exemption, suspension allows an employee to opt out, and unpaid absence does not attract contributions from either the employee or the government.