The Ministry of Finance has announced a three-month extension for eligible Central Government employees, past retirees, and legally wedded spouses of deceased past retirees to opt for the Unified Pension Scheme (UPS). The new deadline is September 30, 2025, extended from the original date of June 30, 2025. This extension comes in response to numerous requests from stakeholders seeking additional time to evaluate and decide between the UPS and the existing National Pension System (NPS).

The Unified Pension Scheme, which became operational on April 1, 2025, represents a significant shift in the pension framework for government employees. Notified on January 24, 2025, and further detailed in regulations issued by the Pension Fund Regulatory and Development Authority (PFRDA) on March 19, 2025, the UPS aims to provide a more comprehensive and beneficial retirement package compared to the NPS.

Under the UPS, government employees who joined service on or after January 1, 2004, now have the option to switch from NPS to UPS. This option is also available, on an optional basis, to State government employees. A key feature of the UPS is the enhanced government contribution, which has been raised to 18.5% from the previous 14%. Meanwhile, the employee contribution remains steady at 10% of their basic pay plus Dearness Allowance (DA).

The UPS is designed to offer five major benefits within a single, unified structure. These include:

• Assured Pension: Providing a guaranteed pension payout to retirees.
• Assured Family Pension: Ensuring financial security for the families of deceased pensioners.
• Assured Minimum Pension: Guaranteeing a minimum pension amount, safeguarding against market fluctuations.
• Inflation Indexation: Adjusting pension payouts to account for inflation, preserving purchasing power.
• Lump Sum Payment at Superannuation: Offering a lump sum payment upon retirement, in addition to gratuity.

The entire pension corpus under UPS is divided into two funds: an individual pension fund and a government contribution fund. The employee's contribution, along with a matching government contribution, is credited to the individual pension fund, which is then invested.

The decision to extend the deadline reflects the government's commitment to ensuring that all eligible individuals have ample opportunity to understand the intricacies of the UPS and make an informed choice about their retirement planning. With the extended deadline now set for September 30, 2025, government employees are encouraged to carefully evaluate their options and select the pension scheme that best aligns with their individual needs and financial goals. The UPS presents a potentially attractive alternative to the NPS, offering a blend of assured benefits and market-linked returns.