Central Government Employees Receive Extended Option: Centre Allows Transfer from NPS to UPS Once
The Unified Pension Scheme (UPS), a new option under the National Pension System (NPS), was notified by the central government on January 24, 2025. This scheme, effective from April 1, 2025, aims to offer more flexibility and security for retirement planning for central government employees.
UPS has been designed to provide financial security and stability to employees after retirement. Employees who join UPS are entitled to a minimum pension of Rs 10,000 per month after completing 10 years of service, a significant benefit for long-serving employees. Additionally, a lump sum benefit of 10% of emoluments is paid for every six months of completed service under UPS.
Central government employees who joined service between April 1, 2025, and August 31, 2025, are eligible for this scheme. The cut-off date for other eligible employees and retirees is also September 30, 2025. The choice to opt for UPS must be made by this date. It is important to note that employees facing dismissal, compulsory retirement, or pending disciplinary action are not eligible for this option.
Compared to the market-linked NPS, UPS provides greater security. Central government employees shifting to UPS are entitled to an assured monthly pension equal to 50% of their average basic pay from the last 12 months, given they complete 25 years of service. UPS also offers family pension benefits, with the spouse entitled to 60% of the last payout, along with dearness relief linked to inflation.
A notable feature of UPS is that all central government employees covered under UPS will now be entitled to retirement and death gratuity, similar to the Old Pension Scheme (OPS). The retirement and death gratuity benefits for UPS employees are effective as of June, as stated by Union Minister Jitendra Singh.
Moreover, an order has been issued by the Department of Pension and Pensioners' Welfare (DOPPW) stating that employees under UPS will receive OPS-like benefits in case of death, physical disability, or retirement from service.
The implementation of UPS is expected to be a major relief for employees under the scheme. It offers a more predictable and stable retirement income, providing peace of mind for many central government employees. However, it is crucial to note that employees who switch to UPS can later return to NPS, but the decision is final and irreversible.
In conclusion, the Unified Pension Scheme (UPS) is a significant step forward in providing financial security and stability for central government employees during their retirement years. With its guaranteed pension benefits, family pension options, and OPS-like benefits in case of certain events, UPS is set to revolutionise retirement planning for central government employees.
