Government has no plans to replace Unified Pension Scheme, over 1.18 lakh employees opt in

The Centre has no proposal to amend or replace the Unified Pension Scheme (UPS), Finance Minister Nirmala Sitharaman told the Lok Sabha, reaffirming the government's commitment to the pension framework introduced for Central government employees under the National Pension System (NPS).

In a written reply to Parliament, Sitharaman said UPS will continue as an optional pension scheme under NPS and there are currently no plans to alter its structure.

"UPS has been introduced as an option under NPS for the employees of the Central Government who are covered under the NPS. As on date, there is no proposal under consideration to make any changes or replace the UPS," the Finance Minister said.

The scheme came into force on April 1, 2025, offering eligible Central government employees a pension option with assured post-retirement benefits while retaining a contributory pension model. According to the government, 1,18,404 employees—including new recruits, serving employees and eligible retirees—had opted for UPS as of July 19, 2026.

What is the Unified Pension Scheme?

The Unified Pension Scheme was introduced to provide greater certainty in retirement income for Central government employees covered under NPS. While the National Pension System offers market-linked returns, UPS guarantees an assured pension subject to specified conditions, along with inflation-linked revisions.

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Under the scheme, employees receive a pension equivalent to 50% of the average basic pay drawn during the last 12 months before retirement, subject to eligibility criteria. In the event of the pensioner's death, eligible family members are entitled to 60% of the employee's pension as family pension.

UPS is available to Central government employees already covered under NPS. The government also extended the option to eligible retirees who retired on or before March 31, 2025, provided they completed at least 10 years of regular service. Legally wedded spouses of eligible deceased retirees are also covered.

No review conducted yet

Since UPS has been operational only since April 2025, the government has not yet undertaken a formal assessment of its implementation or performance, Sitharaman informed Parliament.

The Centre had previously extended the deadline for employees to exercise the UPS option until November 30, 2025, following requests from employee organisations and associations seeking additional time.

Additional benefits under UPS

Employees choosing UPS continue to enjoy several benefits that were available under NPS. These include retirement gratuity and death gratuity under the Central Civil Services (CCS) Rules, 2021.

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In cases involving death in service, invalidation or disablement, UPS subscribers can also opt for benefits available under the CCS Rules, 2021 or CCS Rules, 2023, as applicable.

The government has also extended the same tax benefits available to NPS subscribers to those opting for UPS. Additionally, employees who switched to UPS were given a one-time, irrevocable option to move back to NPS.

OPS vs NPS vs UPS: Key differences

(With PTI inputs)

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