There is good news for government employees. The government is once again giving the employees a chance to choose between NPS and UPS pension scheme. The government has given a one-time opportunity to those employees to choose their pension scheme. This opportunity will be given to those employees who have joined the job between 1 April 2025 to 31 August 2025. These employees are currently in the National Pension System (NPS). Now these employees can choose the Unified Pension Scheme (UPS) if they wish. Employees can make this shift till 30 September 2025.

Changes can be made till 30 September

According to the Finance Ministry, employees can exercise this option until September 30, 2025. The government states that this is intended to provide employees with better financial security after retirement. Furthermore, if an employee chooses UPS now, they can switch back to NPS in the future if they wish. This move will give employees the freedom to choose the right pension plan based on their needs and convenience.

What is UPS scheme?

UPS is a fund-based pension system. Contributions from both the employee and the central government are deposited every month, and upon retirement, the employee receives a regular pension. The best part is that it provides a guaranteed monthly pension of at least ₹10,000, provided the employee has served for at least 10 years.

What is the difference between UPS and NPS?

NPS is market-based, investing in assets like stocks and bonds. Therefore, returns depend on market movements.

Pension in UPS is guaranteed and is linked to your last salary.

In NPS, pension is calculated based on the corpus deposited upon retirement. In UPS, the minimum pension is fixed at ₹10,000.

How to shift from NPS to UPS online?

For this, the government has started an easy process on the eNPS portal.

Step-by-Step Process

Visit the eNPS portal.

Select NPS to UPS Migration option.

Enter your PRAN number and date of birth.

Do OTP verification.

Read and accept the declaration and e-Sign it.

Enter OTP from Aadhaar Number/VID and verify.

If the process is successful, you will get an Acknowledgement Number and you will be able to download the form.

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Under the UPS scheme, employees are guaranteed 50 percent of their average basic salary as pension in the last 12 months before retirement if they have a minimum qualifying service of 25 years. The amount received in NPS depends on the returns from the market.

How will the pension be decided

The Union Cabinet has recently approved the UPS scheme. In this scheme, pension will be decided on a proportionate basis for a minimum service period of 10 years. Also, a pension of Rs 10,000 per month has also been ensured on retirement after a minimum service of 10 years. This scheme has been brought to address the concerns of government employees related to NPS. NPS was implemented from January 1, 2004. Earlier, under the Old Pension Scheme (OPS), employees used to get 50 percent of their last basic salary as pension.

Who contributes how much to the pension

However, unlike the old pension scheme, UPS is a contributory scheme in which employees will have to contribute 10 per cent of their basic salary and dearness allowance. The employer’s (central government) contribution will be 18.5 per cent. Under NPS, the employer’s contribution has been kept at 14 per cent while the employee’s contribution is fixed at 10 per cent. Despite this, the final payment to the employee under NPS depends on the market return of the fund, which is mostly invested in government loans.

This was the arrangement in OPS

Under the OPS, which was in force till December 2003, government employees were not required to make any contribution. However, they used to contribute to the General Provident Fund (GPF). The deposited amount was given at the time of retirement of the employee along with interest. Compared to OPS, NPS did not become a center of attraction among the employees. In such a situation, some non-BJP ruled states decided to go back to the old pension scheme, which provided benefits related to dearness allowance (DA).

Also Read: Maximum and Minimum pension calculation under UPS and 8th Pay Commission: know how much pension you will get

Many states had implemented OPS

Amid growing pressure to implement OPS, the Centre had in April 2023 constituted a committee headed by former finance secretary and current Cabinet Secretary-designate TV Somanathan to suggest improvements in the NPS structure. The Union Cabinet approved UPS on August 24, meeting the long-pending demands of government employees ahead of assembly elections in some states.

Only 23 lakh people will get UPS

UPS will provide assured pension to 23 lakh eligible central government employees. However, those who opt for UPS will not be able to go back to NPS. UPS is expected to put an additional burden of Rs 6,250 crore on the government treasury every year. However, due to changes in the number of employees, the expenditure on this will vary every year. Apart from this, employees retiring before March 31, 2025 are to be paid an outstanding amount of Rs 800 crore under NPS. If these retired employees opt for UPS, they will get the outstanding amount.

UPS can be available for Rs 90 lakh

Information and Broadcasting Minister Ashwini Vaishnav on Sunday said on the social media platform X that 23 lakh central government employees will benefit from UPS. He said that if the states also adopt the UPS framework, then a total of more than 90 lakh government employees who are currently part of NPS will benefit from it. The Maharashtra government, which is going to face assembly elections later this year, has announced the adoption of UPS for its employees. It has become the first state in the country to do so.

Labor union opinion on UPS

RSS-affiliated Bharatiya Mazdoor Sangh (BMS) said that by introducing UPS, the government has tried to overcome the shortcomings of NPS, but there are still some issues compared to OPS. BMS will decide its future course of action only after a detailed study of UPS after it is notified. Trade union All India Trade Union Congress (AITUC) said that it is just an extension of the existing NPS. It feared that there will be many anomalies in UPS after its implementation. It said that it will continue to fight for the restoration of non-contributory OPS.

What does ICRA agency say

Aditi Nair, chief economist at rating agency ICRA, said the provision of assured pension would increase the government’s committed expenditure in the future but reduce uncertainty for employees. Dorothy Thomas, partner at Shardul Amarchand Mangaldas & Co, said UPS represents a thoughtful approach to long-term social security, which addresses concerns about the adequacy and sustainability of pension benefits in a rapidly changing economic scenario.

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