Government employees have to choose their pension scheme by September 30. The central government has introduced the Unified Pension Scheme (UPS) as an option along with the National Pension System (NPS).
Under UPS, employees will get a fixed monthly pension after retirement. This scheme will be implemented from April 1, 2025.
Employees currently under NPS can switch to UPS if they want. The last date for this switch is September 30, 2025, extended from the earlier deadline of July 31.
What is UPS?
UPS is a fund-based pension system. Under it, both employees and the central government contribute 10% each of the employee’s basic pay plus DA.
In addition, the government will contribute an extra 8.5%. Based on these contributions, employees will receive a guaranteed monthly pension after retirement.
The aim of UPS is to give employees a fixed and secure income after retirement.
Who can opt for UPS?
This scheme is available for central government employees who joined service on or after January 1, 2004, and are covered under NPS.
However, railway employees, contractual staff, All India Services, and some other categories are excluded.
New employees joining after April 1, 2025, can also opt for UPS within 30 days of joining.
Difference between UPS and NPS
NPS is market-linked, and returns depend on stock and bond market performance. UPS, on the other hand, offers a guaranteed pension.
Employees completing at least 10 years of service in UPS will receive a fixed pension of ₹10,000 per month.
Those with 25 years of service will get 50% of their average salary from the last 12 months as a pension.
Tax Benefits
Contributions made by employees and employers in both NPS and UPS qualify for income tax deductions.
Government contributions up to 14% are also tax-free. In UPS, the extra 8.5% contribution from the government makes it even more attractive.
Special features of UPS
Employee + government contributions together add up to 20%.
The extra 8.5% from the government goes into a pooled fund.
Pension is available even on voluntary retirement after 25 years of service.
At retirement, employees can also withdraw a lump sum — equal to 10% of monthly salary for every six months of service.
How to switch from NPS to UPS?
Employees can shift through both online and offline methods.
Online method
Visit the eNPS portal.
Enter your PRAN number, date of birth, and choose “NPS to UPS Migration.”
Verify with the OTP sent to your mobile/email.
Read and accept the declaration, then e-Sign it.
Verify again using Aadhaar OTP.
After submission, a receipt number will be generated.
Offline method
Download Form A2.
Fill it and submit it to your head of office.
It will be forwarded to the DDO and then to the CRA.
The first installment must be deposited within 20 days of application.
