UPS To NPS: Can employees switch from UPS to NPS? The government gave the answer in a new order..

If you are a central government employee, then there is some big and good news for you! The Finance Ministry has launched a new facility on Monday, 25 August 2025, in which you can switch from the Unified Pension Scheme (UPS) to the National Pension System (NPS) once. This facility is being given so that you can choose your pension scheme according to your choice and need.

From April 1, 2025, the government started UPS as an option under NPS, in which employees get a fixed pension. So far, 31,555 central employees have chosen UPS. The last date for enrollment in this is 30 September 2025. But now the Finance Ministry has said in an office memorandum that employees who have chosen UPS can change it to NPS once. This switch can be done one year before retirement or three months before voluntary retirement. Once NPS is chosen, it cannot be changed back. Also, UPS will provide the benefit of retirement gratuity and death gratuity. If an employee dies during the job or leaves the job due to disability, they can avail the benefits under CCS (Pension) Rules, 2021, or CCS (Extra Pension) Rules, 2023.

What will be the benefit, and what to do?

On switching to NPS, you will not get the fixed pension of UPS, but the returns from investment in the market will be added to your pension fund. The government will also put 4% additional amount in your NPS account, which will be useful on retirement. Apart from this, UPS will also get tax benefits like NPS, as per the Income Tax Act, 1961. This facility is available till 30 September 2025, and if you do not do anything, your option will remain UPS only. Do not forget to get information about this from your ministry or department.

What to think and what next?

This move can be beneficial for employees who understand that the returns of NPS are better, but there is also risk. UPS is safe, but NPS is market-dependent. So take a decision keeping in mind your retirement plan and risk-taking capacity. It would also be good to talk to a financial advisor. Do you like this change? Share your opinion in the comments, so that we can all discuss it together!

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