Unified Pension Scheme: For central government employees who joined between April 1, 2025, and August 31, 2025, and who chose the National Pension System, the government has chosen to offer them a one-time opportunity to switch to the Unified Pension Scheme (UPS).

The finance ministry stated in a statement on Tuesday that this option may be exercised by September 30, 2025, at the latest, in accordance with the deadline already set for other UPS-eligible groups. It further stated that the goal of this project is to give central government workers the information they need to plan for their financial stability after retirement.

UPS to NPS Conversion:

Employees who choose UPS retain the option to convert to NPS later. The government set September 30, 2025, as the deadline for eligible employees and former NPS retirees to opt for UPS. From April 1, 2025, central government employees can select UPS under the National Pension System (NPS). UPS guarantees employees assured compensation.

Central government workers who come under the NPS, effective from January 1, 2004, can also opt for UPS. Around 23 lakh government employees now have the choice between UPS and NPS. The Union Cabinet, led by Prime Minister Narendra Modi, approved UPS on August 24, 2024. Under the old pension scheme, which ended in January 2004, employees received 50% of their last drawn basic salary as pension.

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In contrast to the OPS, UPS is a contributing system, meaning that employees must contribute 10% of their base pay and dearness allowance, while the central government, the employer, contributes 18.5%. The final payout, however, is contingent upon the market returns on that corpus, which is primarily made up of government debt investments.

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