The Union Finance Ministry has announced that central government employees will be allowed a one-time, one-way switch from the Unified Pension Scheme (UPS) to the National Pension System (NPS). This facility is available up to one year before retirement or three months before voluntary retirement, whichever is earlier.
Eligibility Criteria
- Employees facing dismissal, removal, or disciplinary action will not be eligible.
- Once an employee opts for the switch, they will forfeit all UPS benefits, including assured monthly payouts.
Contribution to NPS
Employees who switch will also receive the government’s additional 4% contribution, which will be added to their NPS retirement corpus. This ensures the extra contribution becomes part of their long-term retirement savings.
Background of UPS
- The Unified Pension Scheme (UPS) was launched on April 1, 2025, as an alternative to the NPS for central government employees.
- The scheme provides assured pension payouts, unlike the NPS, which is market-linked.
- As of July 20, 2025, around 31,555 employees have already opted for UPS.
- The last date to enrol in UPS is September 30, 2025.
Summary
The Finance Ministry’s decision gives central government employees greater flexibility by allowing a one-time, irreversible shift from UPS to NPS. While employees switching to NPS will lose assured payouts, they will benefit from higher corpus accumulation, including the government’s 4% additional contribution. With the enrolment deadline for UPS set at September 30, 2025, employees must carefully weigh the security of fixed payouts under UPS against the market-linked growth potential of NPS before making a final decision.
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