The government has given central and state employees a one-time chance to move from the National Pension System (NPS) to the Unified Pension Scheme (UPS), which works like the old pension scheme.
This option is available till 30 September 2025. Employees must apply before the deadline, as the choice is final — once UPS is chosen, they cannot return to NPS.
UPS provides a fixed guaranteed pension, while NPS is market-linked, meaning returns depend on market performance.
Key Differences Between NPS and UPS
UPS (Unified Pension Scheme): Provides a guaranteed pension equal to 50% of the average basic salary of the last 12 months, if the employee has completed 25 years of service.
NPS (National Pension System): Based on market performance. The retirement corpus and pension depend on investments in shares, bonds, and government securities.
???? This makes the choice especially important for employees close to retirement.
Timeline and Rules for Switching
Employees must apply at least 1 year before retirement or 3 months before voluntary retirement (VRS).
The option will not be available if:
The employee is dismissed.
Disciplinary action is pending.
The employee is given compulsory retirement as punishment.
Employees who do not apply will be automatically moved to UPS.
Why This Decision is Important
Experts advise employees to think carefully before deciding:
Risk Capacity: NPS carries market risk but can give higher returns in the long run.
Service Period: Full UPS benefits are available only after 25 years of service.
Retirement Planning:
Younger employees may prefer NPS for flexibility and growth.
Employees nearing retirement may find UPS safer due to its guaranteed pension.
What Employees Should Do
Check your total service years and time left until retirement.
Compare the guaranteed pension of UPS with the potential corpus and returns of NPS.
Understand the tax benefits and liabilities of both schemes.
The government has directed all ministries and departments to inform employees about this option, but the final decision rests with each employee.
