Want to switch from UPS to NPS? The government is giving you the opportunity to switch, know its terms and conditions

The government has decided to give a one-time option to switch from the Unified Pension Scheme (UPS) to the National Pension System (NPS). Now, central employees choosing UPS will have the facility to shift to NPS up to one year before retirement. After this change, the employee will not get the guaranteed pension of UPS, but the rules of NPS will apply.

The government has made an important announcement regarding the pension scheme. The Finance Ministry has issued an order saying that a one-time option will be given to switch from Unified Pension Scheme (UPS) to National Pension System (NPS). This decision will benefit lakhs of central employees, because now they will be able to choose the pension scheme according to their need and convenience.

Now the question arises that when and how will you be able to switch? This switch can be done only once and in one direction. Employees choosing UPS can shift to NPS up to one year before the date of retirement. If someone is retiring voluntarily, he will have to choose this option 3 months in advance. Employees who have resigned or have disciplinary cases will not get this facility.

What will be the effect of moving from UPS to NPS?

On moving to NPS, the employee will not get the guaranteed pension of UPS.

An additional 4% contribution of the government will be added to the NPS account.

After this, the employee will get money only under the rules of NPS.

PFRDA (Exit & Withdrawal under NPS) Regulations, 2015 will be applicable.

Who will not get this opportunity?

Employees who have been removed, dismissed or are undergoing disciplinary investigation will not get this facility. If the switch is not made by the stipulated time limit, the employee will remain in UPS by default.

UPS vs NPS - what is the difference?

Why did the government take this decision?

The government believes that due to both UPS and NPS schemes running simultaneously, there was a lack of options for the employees. UPS is a new scheme, but many employees consider NPS to be more flexible. That is why the government has given this one-time opportunity so that employees can decide their retirement plan according to their convenience by coming from UPS to NPS.

Big benefit for employees

Now employees have flexibility.

If they want a guaranteed pension, they can stay in UPS.

If they expect higher market-based returns, they can go to NPS.

The government's additional 4% contribution to NPS will also benefit them.

Conclusion

This decision of the government gives flexibility to employees in pension planning. However, after going to NPS, the guaranteed pension of UPS will have to be given up. In such a situation, employees should take the right decision keeping in mind their age, financial need and risk-taking ability.

Frequently Asked Questions (FAQs)

1. Can one go from UPS to NPS again and again?

No, this facility will be available only once.

2. What will be the last date for switching?

1 year before retirement or 3 months before taking VRS.

3. Will I get guaranteed pension on leaving UPS?

No, I will not get guaranteed pension after choosing NPS.

4. When will I get the additional 4% government contribution?

It will be added to the NPS account at the time of exit.

5. Can employees facing disciplinary action go to NPS?

No, this facility will not be available in such cases.