Unified Pension Scheme (UPS) latest updates: The deadline to switch from the National Pension System (NPS) from the Unified Pension Scheme (UPS) will end today, giving eligible central government employees one last chance to exercise the UPS pension plan.
The UPS was launched on April 1 this year as an optional scheme under the existing NPS framework for central government employees, except for the personnel of the Indian armed forces.
As per the regulations, eligible existing employees, past retirees, and the legally wedded spouses of deceased past retirees were initially given a period of three months i.e., up to 30th June 2025 to exercise their UPS option under the NPS scheme. However, in view of the sluggish response from employees, the government later extended the due date by another three months until September 30, 2025.
UPS failed to take off
There has been a long-standing debate regarding the pension system for central employees. Employees and unions have repeatedly demanded that the NPS be abolished and the Old Pension Scheme (OPS) be restored. Amidst these demands and discussions, the central government found a middle ground. It announced the implementation of the Unified Pension Scheme, which seems to have failed to convince central government employees. So far just 1 lakh government employees have opted for the scheme out of 23 lakh eligible staff.
Now, employees have just 12 hours to make a final decision on whether to remain in the NPS or choose the UPS. This deadline has caused both confusion and curiosity among employees.
When did the UPS come into effect?
Introducing the UPS, the Finance Minister clarified that the scheme would be effective from April 1, 2025.
UPS benefits will be available only to employees who are already in NPS and whose service period began after 2004.
Employees have until September 30, 2025, to choose whether to shift to UPS or remain in NPS.
Who can choose UPS and who cannot?
Eligible: All central government employees appointed after January 1, 2004, and currently in NPS.
Not eligible:
Those already receiving OPS (Old Pension Scheme).
Employees who have retired and are receiving pension from NPS.
Different rules may apply for employees in the defense services and certain categories of employees.
UPS vs. NPS: Key differences
Guaranteed pension provision:
Pension in NPS depends entirely on how much you invest and the market returns.
UPS promises that employees will receive a fixed percentage of their salary as pension.
Contribution:
Both employees and the government contribute to NPS, and this investment is invested in equities and bonds in the market.
The contribution method in UPS will remain the same as NPS, but pension will be calculated using a guaranteed formula.
Security vs. flexibility:
NPS is investment-based and flexible, but returns are uncertain.
UPS focuses more on security and stability.
The difference between UPS and OPS (Old Pension Scheme)
The primary demand of employee organizations has been to reinstate OPS. Under OPS, 50% of the last salary was paid as pension after retirement, and there was no employee contribution.
However, UPS is not a fully government-funded scheme like OPS. Contributions will remain similar to NPS, but pensions will be guaranteed like OPS. It can be said that UPS is a hybrid model that combines the features of both OPS and NPS.
What if the September 30th deadline is missed?
The government has clarified that this option will only be available until September 30, 2025.
If an employee does not opt for UPS by this deadline, they will automatically remain in NPS.
There will be no second chance to switch to UPS later. This means it is a “one-time switch option.”
Why is UPS considered necessary?
Employees did not fully trust NPS because it did not guarantee a pension.
UPS will provide employees with the assurance of an assured pension.
The government will also not have to bear the full financial burden of OPS, as the contribution system will remain in place.
Unions believe that this will alleviate employees’ retirement concerns to some extent.