UPS Vs NPS: What Changes For Central Government Employees

It's deadline day for central government employees to switch from the market-linked National Pension System (NPS) to the newly introduced Unified Pension Scheme (UPS). Eligible employees who do not switch before September 30 will remain under NPS by default.

The original June 30 deadline to opt for UPS was extended to September 30, allowing employees more time to consider their pension options. After the deadline, the ones who choose to remain in NPS cannot opt for UPS under any circumstances.

In an official notification earlier this month, the Ministry of Finance announced, "The last date for eligible employees and past retirees under NPS to opt for UPS is September 30, 2025."

"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," it added.

Key Guidelines to switching from UPS to NPS

According to the Finance Ministry, the specific conditions for switching from the Unified Pension Scheme (UPS) to the National Pension System (NPS) are:

- Eligible UPS employees can only switch to NPS once and cannot switch back.

- The switch must be made at least one year before superannuation or three months prior to voluntary retirement, whichever is appropriate.

- Those who do not choose the switch within the specified time will continue to use UPS by default.

- The switch option will not be available in the event of removal, dismissal, or involuntary retirement as a penalty, or in circumstances where disciplinary proceedings are ongoing or planned.

- Employees who choose to remain in NPS are not eligible for UPS after September 30

What Is UPS, and How Is It Different From NPS?

Introduced by the Government of India, the Unified Pension Scheme (UPS) is an option under the National Pension System (NPS) for Central Government employees. It came into effect on April 01, 2025.

It provides a fund-based system with contributions from both the employee and the employer. Unlike the market-linked NPS, UPS offers an assured pension, with a guaranteed minimum payout, low risk, and benefits such as gratuity, ensuring greater financial security for retirees.

Central government employees appointed on or after January 1, 2004, who are under NPS are eligible to opt for UPS. Those already covered by the CCS (Pension) Rules, 2021, railway servants, casual/daily-rated employees, contingency staff, All India Services, contract employees, and others aren't eligible to apply.

Employees in service can choose UPS until September 30. New employees starting on or after April 1, 2025, can choose UPS within 30 days after their joining.