UPS vs NPS: Last Day to Choose Your Pension Scheme – Key Details Every Government Employee Must Know
Government employees have just one day left to decide their retirement plan. The central government has introduced a new Unified Pension Scheme (UPS) alongside the existing National Pension System (NPS). Employees who wish to shift from NPS to UPS must submit their choice by September 30, 2025. This deadline was earlier set for July 31 but was extended to give employees more time.
What Is the Unified Pension Scheme (UPS)?
The UPS is a fund-based pension plan designed to provide government employees with a guaranteed monthly pension after retirement. Both the employee and the government contribute 10% each of the basic salary plus dearness allowance (DA). In addition, the government provides an extra 8.5% contribution, making it an attractive option for those seeking stable post-retirement income.
This scheme, effective from April 1, 2025, ensures that employees receive a fixed pension amount irrespective of market fluctuations, giving them financial security in their retirement years.
Who Can Opt for UPS?
The UPS is available to central government employees who joined service on or after January 1, 2004, and are currently under the NPS. However, employees of the Railways, contract staff, and certain other categories are not eligible.
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New employees joining after April 1, 2025 can also select UPS within 30 days of joining.
UPS vs NPS: Key Differences
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Return Type: NPS is market-linked, meaning returns depend on equity and debt market performance. UPS offers a guaranteed pension, shielding employees from market risks.
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Pension Guarantee: Under UPS, employees with at least 10 years of service will receive a minimum pension of ₹10,000 per month. Those completing 25 years of service will get 50% of their last 12 months’ average salary as monthly pension.
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Government Contribution: While both schemes provide tax benefits on contributions, UPS stands out because of the additional 8.5% government contribution to the pension pool.
Tax Benefits
Both NPS and UPS qualify for income tax exemptions on employee and employer contributions. Government contributions of up to 14% are also tax-exempt, making both plans tax-friendly. However, UPS’s extra government contribution makes it more rewarding for long-term planners.
Other UPS Highlights
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Combined employee and government contributions total 20% of basic pay + DA.
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Employees opting for voluntary retirement after 25 years of service will still receive pension benefits.
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Retirees can withdraw a lump sum amount in addition to their monthly pension. The lump sum is calculated as 10% of monthly salary for every six months of service.
How to Shift from NPS to UPS
Employees can choose UPS either online or offline:
Online Process
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Visit the eNPS portal.
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Enter your PRAN number and date of birth, then select NPS to UPS Migration.
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Verify using the OTP sent to your mobile or email.
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Read the declaration, accept it, and e-sign using Aadhaar OTP.
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Submit the application to receive a receipt number.
Offline Process
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Download Form A2 and fill it out.
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Submit it to your Head of Office.
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The form will be forwarded to the Drawing and Disbursing Officer (DDO) and then to the Central Recordkeeping Agency (CRA).
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The first contribution must be deposited within 20 days of approval.
Final Takeaway
For government employees seeking a stable, guaranteed pension, the UPS provides security and predictable returns, while NPS continues to appeal to those willing to take market risks for potentially higher gains. With the September 30 deadline approaching, employees must carefully evaluate their retirement needs and make a decision before the window closes.
Disclaimer: This article is for informational purposes only. Employees should consult their financial advisor or HR department before making a final choice.
