UPS: As deadline approaches, several central government employees still uncertain

While the government may have tried to address concerns around the National Pension System through the Unified Pension Scheme, central government employees still seem wary of the new retirement option, as evidenced by the muted response seen to it.

Complexities in the UPS as well as a reduced rate of government contribution of 10% as against 14% in the NPS, a narrower definition of the family to include only the spouse and a moderate investment pattern with a lack of aggressive equity options, are some of the drawbacks being seen of the UPS.

Employees also seem worried over a provision in the UPS under which in case of death of employee and the spouse after a few years into retirement, the entire pooled corpus will be forfeited and will not be given to the legal heirs. The periodical revision of payout with subsequent Pay Commissions are also seen to be missing in the UPS, as per employees.

The last date for opting for the UPS is September 30, after extending it from the earlier deadline of June 30 based on representations from employees and associations. In the interim, the government has also issued several clarifications around the UPS including a one-time, one-way switch facility for UPS subscribers to opt back to the NPS as well as income tax benefits to UPS subscribers including exemption of lump sum benefits received at superannuation.

Highlighting these measures, department of financial services secretary M Nagaraju had also recently written to secretaries of all Central ministries to ensure wide dissemination of the scheme and its benefits to employees. He has also requested that a nodal officer may be appointed in each department for overseeing the implementation of the UPS.

The UPS was notified by the government on January 28 this year. Under this pension scheme, assured payout is admissible on retirement at the rate of 50% of 12 monthly average basic pay, immediately prior to retirement after a minimum 25 years of qualifying service. In case of lesser qualifying service period, proportionate payout would be admissible.

A recent informal poll by CSS officers had revealed that several are still evaluating the scheme while many others are waiting for more improvements before taking a call on it.

The finance ministry had on July 28 informed the Parliament that 31,555 Central Government employees have opted for the UPS till July 20, 2025. However, since then the numbers are seen to have risen.