UPS Deadline Extended: Finance Ministry Gives Central Government Employees More Time to Opt-In

UPS Deadline Extended: The Finance Ministry has announced an extension of the deadline for opting into the Unified Pension Scheme (UPS), giving central government employees additional time until November 30, 2025. The decision comes in response to a tepid uptake among eligible employees under the National Pension System (NPS), along with requests from stakeholders for more time to assess recent changes to the scheme.

Originally introduced on April 1, 2025, the UPS provides a contributory pension option for central government employees, offering assured payouts. The scheme has been designed to modernize the pension framework, giving employees the flexibility to switch between the UPS and NPS while also providing additional benefits such as tax exemptions and pension on resignation or compulsory retirement.

Despite the potential benefits, only about 1 lakh out of 23 lakh central government employees had opted for the UPS by the September 30 deadline. Reports suggest that around 31,555 employees had exercised the option by July 20. With the extended deadline, authorities hope that more employees will make informed choices and take advantage of the enhanced features under UPS.

What Is the Unified Pension Scheme (UPS)?

The Unified Pension Scheme (UPS) is a contributory pension plan available to central government employees who are covered under the National Pension System (NPS). The scheme was approved by the Union Cabinet on August 24, 2024, and became operational on April 1, 2025.

Features of UPS:

• Contributory Nature: Employees contribute 10% of their basic salary and dearness allowance, while the central government contributes 18.5%.
• Assured Payouts: UPS provides guaranteed pension benefits to employees upon retirement.
• Flexibility: Employees can switch between UPS and NPS based on their preference.
• Benefits on Resignation or Retirement: UPS provides payouts to employees who resign or retire compulsorily.
• Tax Advantages: Contributions to UPS are eligible for certain tax exemptions.

Eligibility and Who Can Opt

The scheme is applicable to:

• Existing central government employees covered under NPS.
• Past retirees who were eligible under NPS.
• Legally wedded spouses of deceased past retirees.

Employees who joined government service before January 1, 2004 had the option of the Old Pension Scheme (OPS), under which pension was fixed at 50% of the last drawn basic pay. The introduction of UPS modernizes this framework by making it contributory and ensuring a sustainable pension model.

Timeline of UPS Deadlines

• Initial Deadline: June 30, 2025, for eligible employees to exercise their choice.
• First Extension: September 30, 2025, based on stakeholder feedback.
• Current Extension: November 30, 2025, to allow employees sufficient time to consider benefits like the switch option, resignation and retirement benefits, and tax exemptions.

The Finance Ministry has instructed the Pension Fund Regulatory and Development Authority (PFRDA) to implement necessary changes in CRA systems, regulations, and circulars to reflect the extended deadline.

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Uptake of UPS So Far

Despite the availability of UPS since April, adoption has been slow:

• 31,555 employees opted for UPS by July 20, 2025.
• Around 1 lakh employees have exercised the option as of the previous deadline.
• Approximately 23 lakh central government employees are eligible to choose between NPS and UPS.

The extension is expected to increase participation as employees get more time to understand the scheme’s features and benefits.

Benefits of Opting for UPS

1. Assured Pension: Employees receive guaranteed payouts after retirement, unlike the variable returns under NPS.
2. Contributory Model: Both employee and employer contributions build a robust pension corpus.
3. Flexibility in Choice: Employees can switch between UPS and NPS based on career and financial planning needs.
4. Additional Benefits: Tax exemptions, pension payouts on resignation, and security for legally wedded spouses of deceased retirees.
5. Financial Security: UPS provides long-term financial stability, especially for employees who prefer a defined pension benefit.

Conclusion

The Finance Ministry’s extension of the UPS deadline to November 30, 2025, provides central government employees with a valuable opportunity to carefully evaluate their retirement planning options. With benefits such as assured payouts, flexibility to switch, and contributions from both employer and employee, UPS offers a modernized and reliable pension framework.

By opting for UPS, employees not only secure their retirement finances but also take advantage of tax benefits and enhanced features that were not available under the old system. Authorities hope that the extended deadline will result in higher participation, ensuring that more employees can benefit from this comprehensive pension scheme.

The extension also reflects the government’s commitment to giving stakeholders sufficient time to make informed financial decisions and strengthens the implementation of UPS across the central government workforce.

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FAQ Section

1. What is the new UPS deadline?
The Finance Ministry has extended the deadline for opting into the Unified Pension Scheme (UPS) to November 30, 2025. Eligible central government employees, past retirees, and legally wedded spouses of deceased past retirees can exercise the option by this date.

2. Who is eligible to opt for UPS?
Eligibility includes existing central government employees covered under NPS, past retirees, and the legally wedded spouses of deceased past retirees. Approximately 23 lakh employees are eligible to choose between UPS and NPS.

3. How does UPS differ from the Old Pension Scheme (OPS)?
Under OPS, pension was 50% of the last drawn basic pay. UPS is contributory, with employees contributing 10% of basic pay and dearness allowance, while the employer contributes 18.5%. UPS provides assured payouts, tax benefits, and flexibility to switch options.

4. What are the key benefits of UPS?
UPS offers assured pension, flexibility to switch with NPS, employer contributions, tax exemptions, and payouts on resignation or compulsory retirement. It also provides financial security to eligible spouses of deceased retirees.

5. How many employees have opted for UPS so far?
As of July 20, 2025, 31,555 employees had opted for UPS. Around 1 lakh employees have exercised the option as of the previous September 30 deadline, out of a total of 23 lakh eligible employees.