Summary of this article
· Deadline to switch from NPS to UPS is September 30, 2025
· Only 31,555 out of eligible employees have opted for UPS, as of July 20, 2025
· Confusion over comparative benefits in the two schemes persists
The Unified Pension Scheme (UPS) switching option will be valid until September 30, 2025. After UPS was launched for central government employees on April 1, 2025, the government set a deadline for employees to opt for UPS on June 30, 2025. However, due to a muted response from eligible employees for various reasons, it then decided to extend the date to September 30, 2025. Notably, in the first three-and-a half months since its introduction, as of July 20, 2025, only 31,555 employees have opted for the new scheme. This is around 1 per cent of the total number of eligible central government employees.
As the deadline approaches, employees must choose between two pension options: UPS or the default National Pension System (NPS).
The lower number of employees switching may be due to several reasons, including the difficulty of reversing the decision, lack of a gratuity, unclear tax rules, and delays in receiving retirement benefits in case of voluntary retirement. Recently, the government included gratuity and tax benefits similar to NPS in UPS to encourage uptake, but the number of employees switching to UPS remains low.
It has even changed the irrevocable, one-time switching rule. Through a gazette notification dated September 2, 2025, by the Department of Pension and Pensioners’ Welfare (DoPPW), a one-time switch back from UPS to NPS has been allowed, with the condition that it should be done at least 12 months before superannuation and three months before the date of voluntary retirement.
However, delayed payment of retirement benefits in case of voluntary retirement remains one of the reasons behind the indecisiveness of employees to choose UPS.
Neeraj Kumar (name changed), 40, a central government employee, feels perplexed in selecting one of these pensions, and thus, under indecisiveness, has not exercised the option. As a result, he remains with the NPS, not out of conscious choice but due to the confusion about the benefits of UPS.
Key Points
The last date of exercising the switching option from NPS to UPS is September 30, 2025. The Switching option from UPS to NPS will be valid only for those who switch to UPS by this date, according to the government’s statement.
The scheme offers a minimum assured pension after 10 years of working, and in addition, a one-time lump sum payment at the time of retirement.
You may read here to know what UPS offers.
There is no update at the time of writing on whether the last date to switch from NPS to UPS would be extended any further.
