The Central Government has made it clear that there is no proposal to amend or replace the Unified Pension Scheme (UPS).
Finance Minister Nirmala Sitharaman informed Parliament that the scheme will continue as an optional pension scheme for Central Government employees covered under the National Pension System (NPS).
According to the government, 1,18,404 employees had opted for the UPS as of July 19, 2026.
UPS Will Continue as an Optional Scheme
In a written reply in the Lok Sabha, the Finance Minister said there is currently no plan to make any changes to the Unified Pension Scheme.
The UPS came into effect on April 1, 2025, to provide Central Government employees with a more predictable retirement income while retaining the contributory structure of the NPS.
The government also said the scheme has been operational for only a little over a year, so no formal review of its performance has been conducted yet.
How Is UPS Different from NPS?
The biggest difference between the two schemes is the way pension is calculated.
Under the National Pension System (NPS), the pension amount depends on:
Employee and government contributions
Market-linked investment returns
Total retirement corpus
Under the Unified Pension Scheme (UPS), eligible employees receive an assured pension equal to 50% of the average basic salary earned during the last 12 months before retirement, subject to the scheme’s conditions.
The pension is also revised periodically to account for inflation.
Family Pension and Other Benefits
The UPS also provides financial security to family members.
If a pensioner passes away, eligible family members can receive a family pension equal to 60% of the employee’s pension.
Employees choosing UPS continue to receive several benefits available under the Central Civil Services (CCS) Rules, including:
Retirement gratuity
Death gratuity
Benefits in cases of disability or invalidation
Tax benefits similar to those available under NPS
Who Can Choose the UPS?
The scheme is available to Central Government employees covered under the NPS.
It also covers certain eligible retirees who retired on or before March 31, 2025, provided they completed at least 10 years of regular service.
Eligible legally wedded spouses of deceased retirees are also covered.
The government had earlier extended the deadline to opt for UPS until November 30, 2025, after receiving requests from employee associations.
OPS, NPS and UPS: What’s the Difference?
The three pension systems work differently:
Old Pension Scheme (OPS): Provided a government-funded pension equal to 50% of the last basic salary along with applicable Dearness Allowance (DA).
National Pension System (NPS): Pension depends on contributions and market-linked returns.
Unified Pension Scheme (UPS): Follows a contributory model like NPS but offers an assured pension of 50% of the average basic pay during the last 12 months of service, subject to eligibility conditions.
With the latest clarification, the government has confirmed that the Unified Pension Scheme will continue in its current form, giving eligible Central Government employees the option to choose it instead of remaining under the NPS.
