UPS Gratuity Calculations: The finance ministry recently announced that Unified Pension Scheme (UPS) account holders will be eligible to get gratuity as per Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021. The maximum retirement and death gratuity that UPS subscribers can get is Rs 25 lakh. What are gratuity rules for UPS subscribers?
Are they different from the gratuity rules for employees following Old Pension Scheme (OPS) and National Pension System (NPS)? What will be the estimated gratuity for an employee with Rs 1,10,000 as last-drawn basic pay and 30 years of service?
What does finance ministry order say about UPS gratuity?
As per a recent order by the Ministry of Personnel, P.G. and Pensions Department of Pension and Pensioners’ Welfare: “It is clarified that the Central Government employees covered by Unified Pension Scheme shall be eligible for benefit of ‘Retirement gratuity and Death gratuity’ under the provisions of the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021.”
Minimum and maximum gratuity in UPS
There is no minimum gratuity limit, while the maximum gratuity a central government employee can get is Rs 25 lakh.
Types of gratuity under UPS
A government employee can get two types of gratuity.
1. Retirement gratuity 2. Death gratuity
Retirement gratuity
An employee becomes eligible to get gratuity after at least 5 years of uninterrupted service.
If service years are less than that, they get service gratuity, a lesser version of retirement gratuity.
The retirement gratuity is calculated @1/4th of a month’s basic pay and dearness allowance (DA) drawn on the date of retirement for each completed six monthly periods of qualifying service.
The gratuity amount payable for qualifying service of 33 years or more is 16½ times the basic pay plus DA, subject to a maximum of Rs 25 lakhs.
Death gratuity
There is no minimum service year criterion for death gratuity. The entitlement of death gratuity is as follows:
| Qualifying Service | Rate |
| Less than one year | 2 times of basic pay |
| One year or more but less than 5 years | 6 times of basic pay |
| 5 years or more but less than 11 years | 12 times of basic pay |
| 11 years or more but less than 20 years | 20 times of basic pay |
| 20 years or more | Half of emoluments for every completed 6 monthly period of qualifying service subject to a maximum of 33 times of emoluments |
UPS vs NPS vs OPS: Where can you get highest gratuity?
Gratuity is calculated on the basis of the last-drawn basic pay and DA. It has nothing to do with the pension system an employee follows.
Gratuity calculation formula
Gratuity= (basic pay+DA) X service half years X 1/4
UPS Gratuity Calculations: Gratuity for employee with Rs 1.10 lakh basic pay, 30 years of service
We are taking the current DA rate of 55 per cent for our story.
So, if the last-drawn basic salary of an employee is Rs 1,10,000. At a 55 per cent rate, their DA amount will be Rs 60,500. The overall salary, thus, will be Rs 1,70,500.
Gratuity= Rs 1,70,500X30X1/4= Rs 12,78,750
