Summary of this article
· Only 31,555 of the eligible employees opted for UPS by July 20, 2025
· The issues include irrevocable option and delayed pension payments
· Government extended gratuity and tax benefits to UPS recently
The last date for the Unified Pension System (UPS) to exercise the pension option is fast approaching. As of July 20, 2025, only 31555 employees have opted for UPS, marking around 1 per cent of the eligible government employees. Despite offering an assured pension, what could be the reason behind the scheme's slow adoption? In fact, there might have been more than one. First, the option is irrevocable, which makes employees wary of selecting the option. The other issues include missing gratuity benefits, discrepancy in qualifying service for full pension, confusion about tax liability, and late payment of UPS pension under voluntary retirement, to name a few.
While the government addressed these issues by extending gratuity and tax benefits to UPS, and allowing a switch option from UPS to NPS, at least one year before the date of superannuation or three months before the voluntary retirement. Besides, it also launched the retirement calculator to compare UPS with the National Pension System (NPS), making it convenient for eligible candidates to decide and select the pension option.
However, one prominent issue remains uncertain as of now: whether the government will allow pension benefits immediately after voluntary retirement.
The UPS rule about this says, "In cases of voluntary retirement after a minimum 25 years of qualifying service, assured payout will commence from the date on which the employee would have superannuated if he had continued in service."
Manjeet Singh Patel, National President of the All India NPS Employees Federation (AINPSEF) and National Mission for Old Pension Scheme Bharat's Chairman, has been discussing UPS issues. Recently, he posted about a VRS payment issue on X (formerly Twitter), "The Central Government has provided the facility to retire after 20 years of regular service, which is a good thing, but there is a need to make this step fully justified by starting immediate pension payments. Just think, sir, if a person completes 25 years of service and reaches the age of 60, they will receive a pension from that very day, whereas if another person takes voluntary retirement after 26 or 27 years of service, they will still have to wait 8 to 10 years until they turn 60 to receive their pension. What kind of justice is this, sir?"
When the delegation of the Government Employees National Confederation (GENC) raised this question before the government, Department of Pension & Pensioners' Welfare (DoP&PW), the department acknowledged the concerns and stated "the department would re-examine these provisions in the UPS."
However, there has been no clarity on this part until now.
The scheme was launched with much noise, but in the first three and a half months, only about 1 per cent of employees subscribed to it.
As the last date (September 30, 2025) for exercising the switching option from NPS to UPS is coming close, it is necessary to clarify this issue.
