The Unified Pension Scheme (UPS), announced on August 24, 2024, was officially notified on January 24, 2025. It will be implemented from April 1, 2025, as an optional scheme under NPS for Central Government employees.
The Unified Pension Scheme (UPS) operates under a corpus structure, which defines the retirement benefits employees will receive upon superannuation. This structure includes both Individual Corpus, accumulated through employee and government contributions, and a Benchmark Corpus, used to assess adequacy.
The scheme ensures employees receive a sustainable pension based on their contributions and investment returns, providing financial security post-retirement while maintaining alignment with fiscal sustainability and inflation protection.
This structure comprises two key components:
The Corpus Structure is defined in Chapter 1: “Preliminary”, under Part 2: “Definitions” of the Regulations, 2025 – Preliminary Draft of Proposed Regulations as follows:
- Benchmark Corpus is defined under Clause (d) as the standard corpus value determined by the authority for comparison, based on assumptions of regular contributions, default investment patterns, and no withdrawals.
- Individual Corpus is defined under Clause (g) as the accumulated amount in a subscriber’s Permanent Retirement Account Number (PRAN), consisting of actual contributions, investment returns, and any adjustments due to withdrawals.
This structure provides a standardized framework for assessing retirement benefits under the Unified Pension Scheme (UPS), which accumulates retirement savings through two primary corpus components:
Individual Corpus:
The Individual Corpus refers to the total accumulated amount in the Permanent Retirement Account Number (PRAN) of a Unified Pension Scheme (UPS) subscriber. This corpus consists of:
- Employee Contributions – Regular deductions from the employee’s salary.
- Government Contributions – Deposits made by the government as per the scheme rules.
- Investment Returns – Growth due to returns on investments made from the accumulated funds.
- Less Withdrawals (if any) – Any partial withdrawals made before retirement reduce the total corpus.
Benchmark Corpus:
The Benchmark Corpus refers to the standard corpus value determined by the regulatory Authority to compare with an individual’s accumulated pension corpus. It is calculated based on certain assumptions to ensure uniformity in evaluating pension adequacy.
Key Assumptions for Benchmark Corpus Calculation:
- Regular and Timely Contributions:
- The employer and employee must make their respective contributions every month without delays, as specified under Regulation 11(1) and 11(2).
- Investment in Default Pattern:
- Contributions are assumed to be invested in the default fund allocation pattern (as set by the authority), ensuring standardized returns.
- No Partial Withdrawals:
- It is assumed that the corpus remains untouched throughout the accumulation phase, meaning no early withdrawals are made before retirement.
- Handling of Missing Contributions:
- If contributions are missing for any period, the contribution amount from the immediately preceding month will be used for calculation instead.
- The Benchmark Corpus is calculated using the Net Asset Value (NAV) of the pension fund for each month, which determines the value of units allocated to the corpus.
- This ensures that all employees’ corpus values are evaluated using a standardized approach, independent of individual investment choices or contribution delays.
Key Differences from Benchmark Corpus:
| Feature | Individual Corpus | Benchmark Corpus |
| Definition | Actual savings in the employee’s PRAN account | Standardized corpus value set by the authority for comparison |
| Based On | Real contributions, investment choices, and withdrawals | Assumed contributions, default investments, and no withdrawals |
| Varies by Individual? | Yes, based on salary, contributions, and fund performance | No, it is predefined for all subscribers |
| Investment Pattern | Employee may have options to choose funds | Uses a default investment pattern |
Classification of Contributions: Individual Corpus or Benchmark Corpus?
The Individual Contribution @ 10% and Government Contribution @ 14% are part of the employee’s Individual Corpus, not the Benchmark Corpus.
- The Individual Corpus consists of the actual accumulated funds in an employee’s pension account.
- Contributions from both the employee (10%) and government (14%) go into the Individual Corpus, along with returns from investments.
Benchmark Corpus is Different
- The Benchmark Corpus is a predefined target set by the government to determine how much corpus is needed to provide a sustainable pension.
- It does not depend on actual contributions but on estimated retirement expenses, inflation, and pension sustainability.
The assured payout formula is:
Where:
- P: Average Basic Pay = ₹45,000
- Q: Qualifying Service in Months (capped at 300 if exceeds) = 300
- IC: Individual Corpus at Retirement = ₹50,00,000
- BC: Benchmark Corpus = ₹50,00,000
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