UPS Comes Into Effect: Retirement Benefits And Migrations Window Explained
The Unified Pension Scheme (UPS) has come into effect, offering central government employees a new retirement framework with guaranteed pensions and greater investment flexibility.
The Unified Pension Scheme (UPS) officially came into effect on Apr. 1, 2025, providing central government employees with a new pension framework. Introduced as an alternative to the National Pension System (NPS), the scheme guarantees structured pension with government contributions and investment flexibility.
Who Can Enroll?
The Pension Fund Regulatory and Development Authority (PFRDA) has outlined three categories of eligible employees under UPS:
Existing employees: Those in central government service as of Apr. 1, 2025, and covered under NPS.
New recruits: Employees joining the central government from Apr. 1, 2025, onwards.
Retired employees: Those who retired on or before Mar. 31, 2025, under NPS, including voluntary retirees.
Employees who joined government service on or after Jan. 1, 2004, are eligible to switch to UPS. New recruits must enroll within 30 days of joining, while current NPS subscribers have a three-month window from Apr. 1, 2025, to make the transition.
Pension Benefits Under UPS
UPS ensures structured pension payouts based on service tenure:
Employees with 25 or more years of service will receive 50% of their average last 12 months' basic salary as pension.
Employees with 10 to 25 years of service will receive a proportional pension.
A minimum assured pension of Rs 10,000 per month is guaranteed for those completing at least 10 years of service.
In the event of the pensioner's death, their spouse will receive 60% of the pension amount as financial support.
Contribution And Investment Options
Under UPS, employees contribute 10% of their basic salary plus dearness allowance (DA), with the government providing a matching contribution, leading to an overall 20% investment. While the government has prescribed default fund management schemes, employees can also opt for private pension fund managers.
Pension Withdrawals And Financial Security
Upon retirement, pensions will be drawn from an employee’s accumulated corpus, functioning similarly to a systematic withdrawal plan in mutual funds. If the corpus is exhausted before the pensioner or their spouse passes away, payments will be sourced from a government-managed common pool to ensure continued financial support.
Migration From NPS To UPS
The migration process for employees wishing to switch from NPS to UPS is now live on the Central Recordkeeping Agency (CRA) portal — (https://www.npscra.nsdl.co.in/ups.php).
Apart from the online option, employees can also submit their migration requests through physical forms.
Existing NPS subscribers have until Jun. 30, 2025, to opt for UPS. Those who do not make a selection within this period will automatically continue under the NPS framework.
Currently, UPS applies only to central government employees only. State governments will individually decide on its adoption for their employees.
