Ministry Of Finance Sets 30 September As Deadline For Switching To UPS

• 19 Sep 2025
• 398 Views

On 18 September 2025, the Ministry of Finance announced that 30th September 2025 would be the last day to switch to the Unified Pension Scheme (UPS) from the National Pension System (NPS) for eligible Central Government employees and past retirees. All the eligible employees are advised to exercise their option well before the deadline so they can avoid any last minute difficulties and ensure their requests get processed on time. 

Employees who wish to remain in NPS cannot opt for UPS after the deadline. As of September 15 2025, only about 40,000 of approx 2.394 million employees under the National Pension System (NPS) had opted for the Unified Pension Scheme (UPS), according to sources in the Department of Pension and Pensioners Welfare. 

On September 2, the department issued the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules 2025. These rules regulate service matters for central government employees who choose to opt for the UPS.

What is Unified Pension Scheme?

According to the official website of PFRDA, “The Unified Pension Scheme (UPS) is a pension scheme introduced by the Government of India, effective 1st April 2025, as an option under the National Pension System (NPS) for Central Government employees. It is designed to provide assured, inflation-indexed, and adequate retirement benefits, addressing concerns of longevity protection and pension predictability. UPS operates within the existing NPS architecture regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and is applicable to both serving and retired employees under specific conditions.”

Until UPS scheme’s announcement last year, central government employees appointed prior to 1 Jan 2004 were covered by the Old Pension Scheme (OPS) - a scheme that guarantees a fixed pension. Employees hired after that date were placed under the NPS - a scheme that is linked to market performance. While NPS subscribers and employee unions continue to demand a return to the OPS for all employees, the government announced the UPS last August. 

Unlike the NPS, which is mandatory for all central government employees who joined on or after 1 Jan 2004, the UPS is an optional scheme. The new scheme offers an assured pension amounting to 50% of the average basic pay the employee received in the last 12 months before retirement, provided they have completed a minimum service of 25 years. In case of pensioner's death, the spouse will receive up to 60% of the pension being drawn.

Eligibility for UPS

The eligibility for UPS is as follows:

1. Individuals who are existing Central Government Employees under NPS as on 01.04.2025.

2. New Recruits who joined Central Government service on or after 01.04.2025.

3. Retired NPS Subscribers who superannuated/retired on or prior to 31.03.2025, provided:

1. They completed minimum of 10 years of qualifying service.

2. Got retirement under FR 56 (j) (not as a penalty).

3. Legally wedded spouse as on retirement date, in case of subscriber’s demise.

What You Need to Know Before Switching from NPS to UPS

Here are a few things you need to know before switching from NPS from UPS:

• Employees who go for UPS by the deadline 30 September will be given a one time option of going back to NPS. This option can be exercised by them up to one year before superannuating or three months prior to opting for voluntary retirement scheme. Upon making this choice, the employee cannot opt for UPS again.

• The department said the option to switch would provide more flexibility to subscribers in opting UPS. It would also provide them informed choice in planning their post retirement financial security.

• Under NPS, the contribution to pension account via permanent retirement account no. (PRAN) is 10% of employee and 14% by employer of basic pay + dearness allowance. On the other hand, in case of UPS, PRAN contribution is 10% for employee and 10% for employer of basic pay + dearness allowance. 

• Under UPS, there is assured payout of 50% of avg basic pay of last 12 months subject to completion of 25 yrs in service. There is no assured amount under NPS and the amount is based on accumulated corpus.

• For assured payout, UPS has pool corpus provision that would be formed via contribution by govt of 8.5% of basic pay + dearness allowance. After 10 yrs of service, under UPS, a min payout of Rs. 10,000 per month is guaranteed.

• For UPS assured payout, employees dismissed from service will be ineligible.

• There is no lump sum payment under NPS. 

• UPS offers lump sum payment equal to 1/10th of last basic pay + dearness allowance for every completed six months of qualifying service at time of superannuation.

This move aims to provide employees a choice in planning their post retirement financial security. Eligible employees have been urged by Department of Financial Services to act early to avoid last minute challenges.

Source: 

• PIB

• PFRDA

• News On Air

• Indian Express