Will UPS get more benefits? Govt considers changes after low employee response
The Unified Pension Scheme (UPS), introduced to blend the benefits of the NPS and old pension model, is under review after a lukewarm response from central government employees.
- Jul 31, 2025,
- Updated Jul 31, 2025 9:21 PM IST
The Indian government is considering amendments to the Unified Pension Scheme (UPS), introduced under the National Pension System (NPS) earlier this year, to increase its appeal among central government employees. Operational since April 1, 2025, UPS aimed to combine features from both the existing NPS and the old pension scheme, offering assured pensions akin to the old system. However, the scheme has not attracted significant interest, prompting an extension of the subscription deadline to September 30, 2025, from the original June 30 deadline.
Despite combining unique elements from previous pension models, the UPS has not captured the interest of its intended audience, central government employees. This tepid response has sparked discussions about potential modifications to the scheme to make it more attractive. Speculations have arisen that these changes could involve sweetening the scheme's benefits to lure more subscribers. The government is keenly observing the situation to determine the best course of action.
During a recent session in the Lok Sabha, MPs Kanwar Singh Tanwar and Sanjay Jaiswal inquired about any planned changes to the UPS. In response, Finance Minister Nirmala Sitharaman stated that the UPS was crafted as an option specifically for central government employees under NPS, and currently, "There is no proposal under consideration to extend such benefits to other pension schemes or sector." She emphasized the government's focus on ensuring the scheme meets the needs of its target audience.
As of now, there are 25,756 retired central government employees eligible for additional benefits under the UPS, as confirmed by Sitharaman.
She further clarified, "These eligible subscribers are those central government employees who have either superannuated or deceased or retired under Fundamental Rules 56(j), on or before 31st March 2025, after completing 10 years or more of qualifying service and were covered under National Pension System." This eligibility criterion is crucial for understanding the scope of the scheme.
The Finance Minister also detailed the claims processed under the UPS, stating that 7,253 claims were received by July 20, 2025, out of which 4,978 were processed for benefits. The scope of the UPS includes extending 'retirement gratuity and death gratuity' under the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021. This extension aims to provide comprehensive coverage to the subscribers.
Moreover, the government has expanded the benefits for UPS subscribers under specific circumstances. "Further, the government employees who opt for UPS under the NPS shall also be eligible for option to avail benefits under the CCS (Pension) Rules, 2021 or the CCS (Extraordinary Pension) Rules, 2023, in the event of death of the government servant during service or his discharge on the ground of invalidation or disablement. The Government has also extended tax benefits to UPS as are available to NPS under the Income Tax Act, 1961," added Sitharaman. These provisions are intended to enhance the scheme's attractiveness.
UPS vs NPS
The UPS has drawn limited interest, with just 1.35% opting to switch from the existing National Pension System (NPS), according to an RTI reply accessed by India Today. As of July 20, only 30,989 out of roughly 23 lakh NPS-enrolled employees had chosen UPS. The Finance Ministry also confirmed 31,555 total switches by that date.
Despite UPS being introduced to address political pressures and discontent over the Old Pension Scheme (OPS), most eligible employees appear satisfied with NPS's market-linked flexibility and tax benefits. In response to the lukewarm uptake, the government extended the switching deadline from June 30 to September 30. Missing this window means permanent continuation under NPS.
The PFRDA clarified it does not maintain state-wise or month-wise data on UPS adoption, nor specific details about All-India Services officers, providing only national-level aggregates.
The Indian government is considering amendments to the Unified Pension Scheme (UPS), introduced under the National Pension System (NPS) earlier this year, to increase its appeal among central government employees. Operational since April 1, 2025, UPS aimed to combine features from both the existing NPS and the old pension scheme, offering assured pensions akin to the old system. However, the scheme has not attracted significant interest, prompting an extension of the subscription deadline to September 30, 2025, from the original June 30 deadline.
Despite combining unique elements from previous pension models, the UPS has not captured the interest of its intended audience, central government employees. This tepid response has sparked discussions about potential modifications to the scheme to make it more attractive. Speculations have arisen that these changes could involve sweetening the scheme's benefits to lure more subscribers. The government is keenly observing the situation to determine the best course of action.
During a recent session in the Lok Sabha, MPs Kanwar Singh Tanwar and Sanjay Jaiswal inquired about any planned changes to the UPS. In response, Finance Minister Nirmala Sitharaman stated that the UPS was crafted as an option specifically for central government employees under NPS, and currently, "There is no proposal under consideration to extend such benefits to other pension schemes or sector." She emphasized the government's focus on ensuring the scheme meets the needs of its target audience.
As of now, there are 25,756 retired central government employees eligible for additional benefits under the UPS, as confirmed by Sitharaman.
She further clarified, "These eligible subscribers are those central government employees who have either superannuated or deceased or retired under Fundamental Rules 56(j), on or before 31st March 2025, after completing 10 years or more of qualifying service and were covered under National Pension System." This eligibility criterion is crucial for understanding the scope of the scheme.
The Finance Minister also detailed the claims processed under the UPS, stating that 7,253 claims were received by July 20, 2025, out of which 4,978 were processed for benefits. The scope of the UPS includes extending 'retirement gratuity and death gratuity' under the Central Civil Service (Payment of Gratuity under National Pension System) Rules, 2021. This extension aims to provide comprehensive coverage to the subscribers.
Moreover, the government has expanded the benefits for UPS subscribers under specific circumstances. "Further, the government employees who opt for UPS under the NPS shall also be eligible for option to avail benefits under the CCS (Pension) Rules, 2021 or the CCS (Extraordinary Pension) Rules, 2023, in the event of death of the government servant during service or his discharge on the ground of invalidation or disablement. The Government has also extended tax benefits to UPS as are available to NPS under the Income Tax Act, 1961," added Sitharaman. These provisions are intended to enhance the scheme's attractiveness.
UPS vs NPS
The UPS has drawn limited interest, with just 1.35% opting to switch from the existing National Pension System (NPS), according to an RTI reply accessed by India Today. As of July 20, only 30,989 out of roughly 23 lakh NPS-enrolled employees had chosen UPS. The Finance Ministry also confirmed 31,555 total switches by that date.
Despite UPS being introduced to address political pressures and discontent over the Old Pension Scheme (OPS), most eligible employees appear satisfied with NPS's market-linked flexibility and tax benefits. In response to the lukewarm uptake, the government extended the switching deadline from June 30 to September 30. Missing this window means permanent continuation under NPS.
The PFRDA clarified it does not maintain state-wise or month-wise data on UPS adoption, nor specific details about All-India Services officers, providing only national-level aggregates.