UPS Vs NPS: What Central Government Employees Should Know As Sept 30 Deadline Nears
Employees can switch to NPS later only once and will be unable to switch back to UPS.
Central government employees face an important Sept. 30 deadline to choose between remaining under the existing National Pension System which is known as the NPS, or switching to the Unified Pension System or the UPS.
Under UPS, the employees will be eligible for an assured, inflation-index pension with a guaranteed minimum payout; whereas NPS is a market-linked scheme with potentially higher pensions, but comes along with risks.
The Pension Fund Regulatory and Development Authority (PFRDA) has issued rules and clarifications to guide their decision. The central government, on Sept. 2, enabled a one-time switch option from UPS to NPS for those who opt for the former. The decision is to be taken by Sept. 30.
Employees can switch to NPS later only once and will be unable to switch back to UPS. The option must be exercised at least one year before superannuation or three months before voluntary retirement or VRS. If employees fail to choose the switch to NPS before these deadline, they will continue under UPS.
It is also important to note that employees who face removal, dismissal, or compulsory retirement as a penalty or in cases where disciplinary proceedings have been initiated, will not be allowed to switch their pension scheme. The PFRDA also addressed the concerns of new government employees who joined between April 1, 2025, and Aug. 31, 2025, and have already opted for NPS, allowing them to migrate to UPS by the Sept. 30 deadline.
New joinees who have been unable to submit their Permanent Retirement Account Number (PRAN) form can physically submit Form A1 to their respective nodal offices. They can also retain the option to switch to NPS later, but this choice once opted for, will remain final.
Acknowledging the potential for system overload with scores of employees rushing to meet the deadline, the PFRDA advised employees to submit physical forms to nodal offices by Sept. 30, 2025, in case of technical glitches or online system unavailability.
The UPS, notably, was introduced in August 2024 following widespread demands from employees' unions to bring back the assured benefits of the Old Pension Scheme.
