Despite the sweetening of the guaranteed Unified Penson Scheme (UPS) and two extensions to the central government staff to switch from the market-linked National Pension System (NPS), only a little over 1,00,000 or 4% of the 2.5 million central government staff have exercised the UPS option so far.
This reflects the challenges to convince the staff about the scheme, which was launched with much expectations and demand from some sections for guaranteed pension.
The UPS option was made available to the government staff from April 1, 2025, with a June 30 deadline for adoption, which was later extended to September 30 and November 30.
According to the breakdown of UPS enrolment available till October 14, 2025, 38,569 civil employees have opted for UPS, followed by railways (23,529), Post (18,303), defence (11,144) and telecom (349).
The low adoption of UPS could be attributed to a lack of awareness and to some extent resistance from paramilitary and railway staff, which constitute nearly two-thirds of the central government employees under NPS.
UPS provides an assured pension of 50% of the last drawn salary (average basic pay of the last 12 months of service) upon superannuation for all employees completing a minimum of 25 years of service, with the value of such deferred compensation fully indexed to inflation. Staff are eligible for a pension after turning 60. Besides, there will be assured payouts to the spouse of the pensioner after his/ her demise at 60% of the last pension drawn. Also, all employees with a minimum of 10 years of service will get an assured pension of Rs 10,000 per month.
According to the extant NPS norms, a maximum of 60% of the accumulated NPS corpus from contributions during a person’s working years is allowed to be withdrawn tax-free at the time of retirement. The subscriber has to invest a minimum of 40% of the corpus in annuities for a regular pension, which is not guaranteed.
Under NPS, central armed police forces (CAPF) could take the voluntary retirement scheme (VRS) after 20 years in service and yet get an immediate pension by investing 80% of their corpus in annuities. In contrast, these staff could take VRS after 25 years in service under UPS, but their pension will start after they turn 60 years old. This is a big dampener for CAPF personnel, who are reluctant to opt for UPS.
Additionally, employee unions may not be actively pushing for it among their members in the hope that the government could give some additional retirement benefits as well, sources said.
To increase the acceptability of UPS, the Centre recently allowed a one-time one-way switch back facility from UPS to NPS, as the staff are weighing the cost-benefit between the two schemes. Earlier, it had extended the income tax benefits available under NPS to UPS.