Ministry of Finance has extended the deadline for central government employees, past retirees, and legally wedded spouses of deceased retirees to opt into the Unified Pension Scheme (UPS) until 30 November 2025.
The previous deadline of 30 September 2025 has been pushed forward by two months following multiple requests from staff unions and stakeholders seeking additional time to assess recent changes in the scheme.
The decision was communicated by the Department of Financial Services (DFS) to the Pension Fund Regulatory and Development Authority (PFRDA), which has been directed to update its systems and issue a circular to implement the extension.
Background: UPS as an Alternative to NPS
The UPS was notified on 24 January 2025 and became operational from 1 April 2025.
It offers a hybrid model that blends the certainty of the old pension scheme with the contributory structure of the National Pension System (NPS).
Under UPS, employees contribute 10% of their basic pay and dearness allowance, while the government contributes 18.5%.
After 25 years of service, the scheme guarantees a pension of 50% of the average basic pay of the last 12 months.
This contrasts with NPS, which remains market-linked and offers variable returns based on investment performance.
For risk-averse employees, UPS provides a more predictable retirement income, while NPS may appeal to those seeking potentially higher returns.
Uptake Remains Modest Despite Extended Window
Despite the initial three-month window and subsequent extensions, uptake has been relatively low.
As of 20 July 2025, only 31,555 employees had opted for UPS, representing just 1.37% of eligible central government employees.
Reports suggest that approximately 1 lakh employees had signed up by the end of September.
The lukewarm response has been attributed to limited awareness and the complexity of choosing between two fundamentally different pension models.
The recent extension aims to give employees more time to understand the implications of their choice, especially in light of new provisions.
Recent Changes Prompt Renewed Interest
Several positive revisions to UPS have been announced in recent months, including:
- Switching flexibility between NPS and UPS
- Additional benefits in cases of resignation or compulsory retirement
- Tax exemptions on contributions and payouts
These updates have prompted renewed interest among eligible employees and retirees, many of whom had requested more time to evaluate the long-term financial impact of opting into UPS.
Who Is Eligible to Opt In for UPS?
The extension applies to:
- Existing central government employees covered under NPS since January 1, 2004
- Past retirees
- Legally wedded spouses of deceased retirees
This is a one-time opportunity to switch to UPS, and the decision is irreversible.
Employees are advised to consult financial advisors and review scheme documents before making their choice.
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