Explained: UPS vs. NPS- All you need to know about new pension choice for central government employees

How different is the UPS or the Unified Pension Scheme from the NPS or the National Pension Scheme? Can an employee, who has earlier opted for the NPS shift to the UPS? Which one is better for you? These and many more questions hit the headlines when the UPS came into force at the beginning of this month. Introduced by the Central Government as an option under NPS for Central Government employees, it came into effect on April 1, 2025. Any existing Central Government employee in service as of 1 April 2025, covered under National Pension System (NPS) is eligible to opt for UPS.

Is retired employee eligible for UPS?

Any Central Government employee, covered under NPS who retired on or before 31st March 2025, and who meets prescribed conditions can shift to the UPS. The legally wedded spouse of the deceased subscriber is also eligible under UPS.

Forms to be filled to opt for UPS?

Form A should be filled out by newly recruited central government employees joining the service on or after April 1, 2025. Form A2 needs to be filled out by an eligible central government employee presently subscribed to the NPS to be covered under the UPS. The form can be submitted online or physically to the Head of Office DDO where the subscriber is employed.

Time limit

The central government employee should exercise the option within three months from April 1, 2025, or within such extended timelines, if any. The recruits joining the government on or after April 1, 2025, should exercise the option within thirty days from the date of joining Central Government
services.

An eligible person who does not exercise the UPS option under NPS within the time limit shall be deemed to have opted to continue under NPS without the UPS option.

Can option of UPS be changed subsequently?

No, once exercised, the option to choose UPS is final and irrevocable. It can not be changed later. 

What is PRAN under UPS?

Permanent Retirement Account Number, or PRAN, is a number allocated to subscribers opting for UPS, and under which all the transactions are recorded.

Is lump-sum payment under UPS allowed?

A lump-sum amount equivalent to one-tenth of the last drawn basic pay (plus NPA and DA) is paid for every completed 6-month period of qualifying service. Besides, the UPS subscriber shall have an option of final withdrawal for an amount not exceeding 60% of the individual corpus or benchmark corpus, whichever is lower.