diff --git a/assets/system-upgrade-controller/system-upgrade-controller-101.1.0+up0.4.0.tgz b/assets/system-upgrade-controller/system-upgrade-controller-101.1.0+up0.4.0.tgz
index 570e0a073..42badb0e9 100644
Binary files a/assets/system-upgrade-controller/system-upgrade-controller-101.1.0+up0.4.0.tgz and b/assets/system-upgrade-controller/system-upgrade-controller-101.1.0+up0.4.0.tgz differ
diff --git a/charts/system-upgrade-controller/101.1.0+up0.4.0/templates/validate-psp-install.yaml b/charts/system-upgrade-controller/101.1.0+up0.4.0/templates/validate-psp-install.yaml
deleted file mode 100644
index 28ce985f0..000000000
--- a/charts/system-upgrade-controller/101.1.0+up0.4.0/templates/validate-psp-install.yaml
+++ /dev/null
@@ -1,5 +0,0 @@
-#{{- if .Values.global.cattle.psp.enabled }}
-#{{- if not (.Capabilities.APIVersions.Has "policy/v1beta1/PodSecurityPolicy") }}
-#{{- fail "The target cluster does not have the PodSecurityPolicy API resource. Please disable PSPs in this chart before proceeding." -}}
-#{{- end }}
-#{{- end }}
\ No newline at end of file
diff --git a/charts/system-upgrade-controller/101.1.0+up0.4.0/values.yaml b/charts/system-upgrade-controller/101.1.0+up0.4.0/values.yaml
index ee3d45346..f6cd03da9 100644
--- a/charts/system-upgrade-controller/101.1.0+up0.4.0/values.yaml
+++ b/charts/system-upgrade-controller/101.1.0+up0.4.0/values.yaml
@@ -2,7 +2,7 @@ global:
   cattle:
     systemDefaultRegistry: ""
     psp:
-      enabled: false
+      enabled: true
 
 systemUpgradeController:
   image:
diff --git a/index.yaml b/index.yaml
index 3088a5be6..d98e2d5cc 100755
--- a/index.yaml
+++ b/index.yaml
@@ -12701,9 +12701,9 @@ entries:
       catalog.cattle.io/release-name: system-upgrade-controller
     apiVersion: v1
     appVersion: v0.10.0
-    created: "2023-02-09T11:05:43.907922-05:00"
+    created: "2023-02-10T10:22:39.333482-05:00"
     description: General purpose controller to make system level updates to nodes
-    digest: 054c75346d3d15d6e711c84f8d3b06f80261b60972d30a9029c10f1feb9ac39b
+    digest: 513cf38eacf00a600d71457b13eb0068676dea5a0c7615a5de3f6b47da704ef7
     home: https://github.com/rancher/system-charts/blob/dev-v2.7/charts/rancher-k3s-upgrader
     kubeVersion: '>= 1.16.0-0'
     name: system-upgrade-controller
diff --git a/packages/system-upgrade-controller/package.yaml b/packages/system-upgrade-controller/package.yaml
index 0a7a8e971..c7cdd4cec 100644
--- a/packages/system-upgrade-controller/package.yaml
+++ b/packages/system-upgrade-controller/package.yaml
@@ -1,4 +1,4 @@
 url: https://github.com/rancher/system-charts.git
 subdirectory: charts/rancher-k3s-upgrader/0.4.0
-commit: f3de5b4765a9f1e93640f36f2f24b5c79cb15656
+commit: f89e0e0885e8e069ca21c72759dbd8b27ec44960
 version: 101.1.0