Govt Extends Unified Pension Scheme Deadline Till November 30

The government has extended the deadline to opt for the Unified Pension Scheme (UPS) till November 30, 2025. The earlier cut-off date was September 30. This extension comes in response to requests from several employee groups and stakeholders for more time, particularly since the government has recently introduced new features to the scheme.

UPS provides clearer guidelines on retirement and resignation benefits, as well as new tax exemptions, giving employees the option to switch from the National Pension System (NPS). 

This extension gives sufficient time to employees, past retirees, and even spouses of deceased retirees to understand the updated framework.

Unified Pension Scheme vs. National Pension System

The Unified Pension Scheme (UPS) was launched on April 1, 2025, as part of the National Pension System (NPS) framework. It was introduced mainly for central government employees who joined service on or after January 1, 2004. Members of the armed forces are not eligible for coverage under this scheme.

The Unified Pension Scheme was introduced after years of debate over retirement security for central government employees. Many unions have demanded a return to the Old Pension Scheme (OPS), which guaranteed 50% of the last salary as pension without employee contributions. The National Pension System (NPS), in contrast, is contribution-based and linked to market performance, leading to uncertainty about post-retirement income.

Key Features of the Unified Pension Scheme (UPS)

The UPS has been designed as a hybrid model that combines the security of OPS with the contribution framework of NPS. 

Its main features are:

• UPS assures employees a fixed percentage of their last drawn salary as a pension.
• Both employees and the government continue to contribute, just as they do under NPS. 
• Employees opting for UPS will have clearer provisions in case of resignation or compulsory retirement, offering more stability compared to NPS.
• The scheme is optional, meaning employees can choose whether to remain in NPS or switch to UPS.
• The scheme comes with specified tax exemptions.
• UPS does not place the entire financial burden on the government, unlike OPS, but it provides employees with the assurance of a predictable pension.

Role of PFRDA in UPS

The Pension Fund Regulatory and Development Authority (PFRDA) has been directed to ensure that the Unified Pension Scheme operates smoothly. 

The following are its roles and responsibilities:

• Update the Central Recordkeeping Agency (CRA) systems to handle UPS accounts and transactions.
• Issue new circulars and regulatory changes to incorporate the additional features of the scheme.
• Oversee the switch process for employees choosing to move from NPS to UPS.
• Ensure that all updates related to retirement benefits, resignation rules, and tax exemptions are properly implemented.

Conclusion

UPS was designed as a middle ground. It allows contributions to continue as in NPS, while also assuring employees of a predictable pension, similar to OPS. For the government, it helps avoid the heavy fiscal burden of fully funding pensions while addressing employees’ concerns about retirement security.

Source: MoneyControl

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