Central government employees have until September 30, 2025, to opt into the Unified Pension Scheme (UPS)—a new retirement option introduced under the National Pension System (NPS).
The scheme, which came into effect on April 1, 2025, was approved by the Cabinet in August 2024 and is designed to offer assured pension payouts to eligible employees.
The Department of Pension and Pensioners’ Welfare has issued detailed rules to govern service-related matters for those choosing UPS.
As of mid-September, only around 40,000 of the 23.94 lakh eligible employees had opted for the scheme, indicating slow adoption despite the extended deadline.
What Is the Unified Pension Scheme (UPS)?
UPS is an optional pension scheme for central government employees who joined service on or after January 1, 2004, and were previously enrolled in the market-linked NPS.
Unlike NPS, which depends on market performance, UPS offers predictable and secure retirement income.
Key features of UPS include:
- Guaranteed pension of 50% of the average basic pay drawn in the last 12 months before retirement, provided the employee has completed 25 years of service.
- Minimum monthly pension of ₹10,000 after 10 years of service.
- Spousal benefit: In case of the pensioner’s death, the spouse is entitled to 60% of the pension.
- Lump sum payout: One-tenth of the last basic pay plus DA for every completed six months of service.
Contribution Structure and Corpus Support
Under UPS, both the employee and employer contribute 10% of the basic pay plus dearness allowance (DA).
This is lower than the NPS, where the employer contributes 14%.
The government supports UPS through a corpus pool equivalent to 8.5% of basic pay plus DA.
This funding ensures the scheme’s sustainability and guarantees pension payouts.
Contributions are made using the Permanent Retirement Account Number (PRAN), similar to NPS.
The scheme also retains eligibility for retirement gratuity and death gratuity, along with access to benefits under the CCS (Pension) Rules, 2021 and CCS (Extraordinary Pension) Rules, 2023, in cases of death or disability during service.
Flexibility to Switch Back to NPS
Employees who opt for UPS by September 30 are allowed a one-time, one-way switch back to NPS, provided they do so at least one year before superannuation or three months before voluntary retirement.
Once this switch is exercised, they cannot rejoin UPS.
This provision is intended to give employees greater control over retirement planning, especially those who may prefer market-linked returns or have shorter service tenures.
Physical Submission Option and New Joinee Inclusion
The Finance Ministry has acknowledged technical challenges in online submissions. It has therefore allowed employees to submit physical forms to their designated nodal offices.
This includes new joinees who entered service on or after April 1, 2025, and have not yet generated their PRAN.
These employees must submit Form A1 by the deadline to be considered for UPS enrollment.
Why UPS Adoption Remains Low?
Despite its guaranteed benefits, UPS has seen limited uptake.
Many employees continue to favour the Old Pension Scheme (OPS). It offers 50% of the last drawn basic pay plus DA without requiring personal contributions.
Employee unions argue that both UPS and NPS fall short of OPS in terms of long-term security and financial advantage.
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