The deadline for central government employees to switch to the Unified Pension Scheme (UPS) is fixed as September 30, 2025, which is approaching soon. However, only around 32,000 employees have opted for UPS so far, while approximately 23.94 lakh employees are eligible for the scheme. This clearly indicates hesitation and confusion among government employees regarding this change.
Meanwhile, the Centre has extended a one-time opportunity for employees in the central government who joined services on or after April 1, 2025 and August 31, 2025.
“In light of the recent clarifications and developments in the scheme, the Central Government has now decided to extend a one-time option to Central Government employees who joined services on or after 01.04.2025 and up to 31.08.2025, and who have opted for National Pension System, to migrate to the Unified Pension Scheme,” according to a PIB release.
This option may be exercised on or before September 30, 2025, in alignment with the cut-off date already prescribed for other eligible categories under UPS.
This initiative aims to provide informed choice to Central Government employees in planning their post-retirement financial security. By opting for UPS, the employees retain their choice for switch to NPS at a later date.
History of UPS and NPS
The history of government pension schemes dates back to 2004. The National Pension System (NPS) was introduced on January 1, 2004, replacing the Old Pension Scheme (OPS). The NPS is a market-based pension scheme for employees, in which both employees and the government contribute, and the pension amount is determined based on investment.
Recently, on April 1, 2025, the government introduced the UPS. UPS is an optional scheme under NPS that provides employees with a fixed pension. UPS aims to further strengthen the financial security of government employees by providing them with a guaranteed pension.
Difference between UPS and NPS
The biggest difference between UPS and NPS is the nature of the pension. Under UPS, employees receive a fixed pension upon retirement, while under NPS, the pension amount is market-based and depends on investment performance. Under UPS, employees must have served for a minimum of 25 years to receive a guaranteed pension of 50% of the average of last 12 months salary before the retirement. However, there is no such limit in NPS. Furthermore, under UPS, the family receives 60% of the employee’s pension after their death, while under NPS, this benefit is limited to 40%.
Comparison of OPS, NPS, and UPS
Under the Old Pension Scheme (OPS), employees did not make any contributions and the pension was fixed. NPS was a market-based scheme, with the pension amount dependent on investments. UPS is an optional scheme offered under NPS that ensures a fixed pension.
Reasons for government employees’ hesitation
Experts say there are several reasons why government employees are hesitant to switch to UPS. UPS pensions are available after the age of 60, while NPS employees can withdraw a certain amount earlier. Furthermore, a minimum of 25 years of service is required for VRS under UPS. The switching procedures are also complex, requiring employees to apply one year in advance or three months before VRS.
Deadline and future
The government has clarified that the last opportunity to switch to UPS is September 30, 2025. After that, employees will remain in NPS. Experts say that UPS offers a fixed pension and better future security, but employees are still hesitant to make the decision due to the terms and procedures.
Summing up…
UPS can be a safe option for government employees. However, employees need to seriously consider their pension plan before the deadline. Understanding the features of both UPS and NPS and making the right choice will be crucial for future financial security.