Finance Minister Nirmala Sitharaman has affirmed that the Central government has no intention of altering or replacing the Unified Pension Scheme (UPS), a framework designed to provide greater certainty in retirement income for its employees under the National Pension System (NPS).
In a written statement to Parliament, Sitharaman clarified that the UPS would continue as an optional component within the NPS and its current structure would remain unchanged. This reconfirms the government's commitment to the scheme, which came into effect on April 1, 2025.
Over 1.18 Lakh Employees Choose UPS
The government reported that as of July 19, 2026, a total of 1,18,404 employees had opted for the Unified Pension Scheme. This figure includes new recruits, currently serving employees, and eligible retirees. The deadline for employees to exercise this option was previously extended to November 30, 2025, following requests from various employee organizations.
What is the Unified Pension Scheme?
The Unified Pension Scheme was introduced to offer Central government employees covered under NPS a pension option with assured post-retirement benefits, distinguishing it from the market-linked returns typically associated with NPS. While maintaining a contributory pension model, UPS guarantees an assured pension, subject to specific conditions, along with inflation-linked revisions.
- Pension Calculation: Employees receive a pension equivalent to 50% of the average basic pay drawn during the last 12 months before retirement, provided they meet the eligibility criteria.
- Family Pension: In the unfortunate event of the pensioner's demise, eligible family members are entitled to 60% of the employee's pension as a family pension.
- Eligibility: UPS is available to Central government employees already covered under NPS. The option was also extended to eligible retirees who retired on or before March 31, 2025, provided they had completed at least 10 years of regular service. Legally wedded spouses of eligible deceased retirees are also covered.
Additional Benefits and Tax Parity
Employees who choose UPS continue to benefit from several provisions available under NPS. These include:
- Retirement gratuity and death gratuity as per the Central Civil Services (CCS) Rules, 2021.
- In cases of death in service, invalidation, or disablement, UPS subscribers can opt for benefits 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. Furthermore, employees who initially switched to UPS were provided a one-time, irrevocable option to revert to NPS.
No Formal Review Conducted Yet
Since its implementation in April 2025, the Unified Pension Scheme has not yet undergone a formal assessment of its performance or broader impact, as Finance Minister Sitharaman informed Parliament.