The central government has extended the deadline for employees, retirees, and spouses of deceased retirees to opt into the Unified Pension Scheme (UPS) until November 30, 2025. This decision, approved by the Finance Minister, comes after multiple requests from stakeholders for more time, considering recent positive changes to the scheme.
The UPS, which took effect on April 1, 2025, initially provided a three-month window, ending June 30, 2025, for eligible individuals to choose the scheme. This was later extended to September 30, 2025. The current extension grants subscribers an additional two months to opt in.
The official notification highlights that recent positive changes in the UPS have spurred renewed interest among employees and retirees. These changes include a switch option, additional benefits in cases of resignation and compulsory retirement, and tax exemptions.
The Department of Financial Services (DFS) under the Ministry of Finance has communicated this extension to the Pension Fund Regulatory and Development Authority (PFRDA). The PFRDA is directed to implement the decision by making necessary changes in the Central Recordkeeping Agency (CRA) systems and issuing a circular.
Earlier, the government had provided a one-time option for employees who joined service between April 1, 2025, and August 31, 2025, to migrate from the National Pension System (NPS) to the UPS. The UPS was initially notified on January 24, 2025. Employees covered under this extension now have until September 30, 2025, to exercise the option, which is also the deadline for other eligible employee categories and past retirees under the NPS to shift to the UPS.
Despite these extensions and incentives, only a small percentage of eligible central government employees had opted for the UPS. As of July 20, 2025, only 31,555 employees had chosen the scheme. Employee associations have cited communication gaps and difficulties in understanding the new rules as reasons for the low uptake, even with the recent incentives to make the UPS more attractive.
The government introduced the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025, to address these concerns. Full pension benefits are now available after 20 years of service instead of 25, benefiting paramilitary personnel who often retire early. The scheme also offers better financial protection for employees' families in case of disability or death.
The UPS offers broader coverage and a more flexible retirement savings plan compared to the NPS. A one-time, one-way switch facility allows UPS subscribers to opt back to the NPS if they are not satisfied with the UPS. However, this switch facility is not available in cases where departmental or judicial proceedings are pending or contemplated against the subscriber, or in case of removal or compulsory retirement as a penalty. Income tax benefits for UPS subscribers have been officially notified under the provisions of the Income Tax Act, 2025.
The UPS benefits are available to employees already in NPS whose service period began after 2004. Those already receiving pensions under the Old Pension Scheme (OPS) and employees who have retired and are receiving pensions from NPS are not eligible. If an employee does not opt for UPS by the extended deadline of November 30, 2025, they will remain in NPS, with no further opportunity to switch to UPS.
