Summary of this article
· Deadline for Unified Pension Scheme switch on September 30, 2025
· After the recent changes, the one-time switch back option from UPS back to NPS is available
· UPS subscribers are eligible for retirement and death gratuity and tax benefits
The deadline to opt for the Unified Pension Scheme (UPS) is only one day away on September 30, 2025. If one has not opted for it but wants to, one can exercise the option by tomorrow. UPS is for the central government employees for now, but the State government can adopt the scheme if it wants to. The government brought UPS as an alternative scheme to the National Pension System (NPS) and emphasises that UPS offers an assured pension. However, adoption rates have been significantly low, with around 1 per cent of the total eligible employees by July 20, 2025.
To make it more attractive and acceptable and to address ambiguities related to the scheme, the Pension Fund Regulatory and Development Authority (PFRDA), the monitoring authority of the scheme, has made some key changes in the last few months. Here is the summary of these changes for a ready reference, based on the Ministry of Communications's one-pager on it issued in the notification dated September 25, 2025.
Summary Of The Recent Changes In UPS
One-Time, One-Way Switch Facility For UPS Subscribers To Switch Back To The NPS: The Department of Financial Services (DFS), through an office memorandum dated August 25, announced the option to switch back from UPS to NPS. Earlier, the switching option from NPS to UPS was irrevocable, but now it is revocable, with certain conditions.
The CCS (Pension) Rules or PFRDA (Operationalisation Of UPS Under NPS) Regulations, 2025, In The Event Of Death Or Disability Or Invalidation Of A Government Servant During Service: These rules apply to the UPS as well. In case of an employee's death, disability, or invalidation, benefits of family pension under the UPS or under OPS, which means under the Central Civil Service (Pension) Rules, are available.
Benefits Of Retirement Gratuity And Death Gratuity Under UPS: The retirement and death gratuity benefit was introduced for UPS subscribers in June 2025. The Department of Pension and Pensioners' Welfare (DoPPW) issued an OM dated June 18, 2025, to cover UPS subscribers under the gratuity benefits under the provisions of the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021.
Tax Benefits To UPS Subscribers Under The Income Tax Act, 2025: The Central Board of Direct Taxes, via OM dated July 2, 2025 made the tax benefits under various Sections '(80CCD (1), 80CCD (1B), 80CCD(2), 80CCD(3), 80CCD(4), 10(12A) and 10(12B)' of the Income-tax Act, 1961 applicable mutatis-mutandis to Unified Pension Scheme (UPS) as per the defined limits of each Section. Note that the lump sum payment at superannuation is tax-exempt in UPS.
Grant Of Benefits Under UPS In Cases Where Departmental Or Judicial Proceedings Are Pending On The Date Of Retirement: PFRDA laid down the provisions regarding this in its Gazette notification dated March 19, 2025.
Provision For Voluntary Retirement After 20 Years Of Qualifying Service: In the Gazette notification dated September 2, 2025, DoPPW notified that employees can take voluntary retirement after completing 20 years of service. In such cases of voluntary retirement, the assured pension will be paid on a pro-rata basis under the PFRDA (Operationalisation of UPS under NPS) Regulations, 2025.
Benefits Payable On Absorption In An Autonomous Body Or Public Sector Undertaking (PSU): On September 24, 2025, PFRDA issued a press release permitting those central government employees who are posted in other organisations or departments on deputation to physically submit Form A2 to their parent organisation to opt for the UPS. This means that such employees are eligible for UPS benefits even if they are posted in a PSU.
One-Time Option To Migrate To UPS Till September 30, 2025 For New Employees: New joiners are required to confirm their preferred pension option within 30 days of joining, but those who have joined on or after April 1, 2025, and up to August 31, 2025, and had initially opted for the NPS, are also allowed to switch from NPS to UPS by September 30. In a circular dated September 19, 2025, PFRDA asked the new joiners to complete the formalities if not already done. They can submit a request offline, too.
