NPS vs UPS: The deadline for government employees to choose UPS is near. They will have the opportunity to switch from NPS to UPS until September 30th. Eight major changes have been made to the scheme since June 2025, which are crucial for employees. Learn more.
NPS vs UPS: The deadline to opt for the Unified Pension Scheme (UPS) is just days away. Government employees currently enrolled in the National Pension System (NPS) and wishing to receive a fixed pension after retirement must switch to UPS by September 30th.
The central government issued a notification regarding UPS on January 24, 2025. Subsequently, several significant changes were made to the system since June to make it more attractive to employees. Now that the deadline is near, learn about eight major changes to UPS since June.
Opportunity to return to NPS
The government has established that if an employee joins UPS and later finds the system unsuitable, they can return to NPS. This facility will be granted only once and will not be available again during their entire service period. This change gives employees the flexibility to keep their options open.
Protection against death or disability during service
If an employee dies while on duty or is declared disabled or invalid, their family will be provided financial protection. Benefits will be provided according to the CCS (Pension) Rules or the PFRDA (which implements the UPS under the NPS) rules. This will give employees the confidence that their families will be taken care of.
Benefits in pending cases also
If departmental or judicial proceedings are pending at the time of an employee’s retirement, they will still receive UPS benefits. Previously, benefits were withheld in such circumstances, but now this rule has been changed in the employee’s favor. This will help employees avoid uncertainty.
Tax relief
UPS subscribers have been granted special tax benefits under the Income Tax Act, 2025. The most significant change is that the lump sum amount received at retirement is completely exempt from tax. This means that both the pension benefits and the tax burden will be significantly reduced.
Gratuity benefit
UPS employees will now receive both retirement gratuity and death gratuity. This means that upon retirement or death, the family will receive a lump sum. This change strengthens existing benefits and provides employees with a sense of security.
pension on voluntary retirement
UPS has established that if an employee takes voluntary retirement after completing 20 years of qualifying service, they will receive a pro-rata pension. This change is a relief for employees who wish to leave their jobs early. It will provide them with the assurance of income even after retirement.
Also valid in PSU or autonomous body
If an employee is absorbed into a public sector company (PSU) or autonomous body during their service period, they will continue to receive UPS benefits. This means that even if they change jobs, their pension benefits will not be lost. This rule makes UPS more flexible.
Deadline extended
The government also extended the initial deadline for opting for UPS. It is now September 30th. Furthermore, employees who joined government service between April 1, 2025, and August 31, 2025, can now switch to UPS. This change also allows new employees to benefit from the scheme.
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