MoF introduces one-time, one-way switch facility from UPS to NPS

In August 2025, the Ministry of Finance (MoF) introduced a one-time, one-way switch facility allowing central government employees to move from the Unified Pension Scheme (UPS) to the National Pension System (NPS).

• The option will remain open until September 30, 2025.

Key Features of Switch Facility:

Switch Facility: This facility may be exercised by UPS optees any time a year prior to the date of superannuation or three months before to the deemed date of retirement in case of voluntary retirement.

Exemptions: The switch option will not be given in case of removal, dismissal or compulsory retirement as a penalty or for cases where disciplinary proceedings are ongoing or contemplated.

Condition: Once employees opt for the switch, they will permanently forfeit UPS benefits, including assured payouts, and cannot revert to the UPS.

Exit Provisions: Upon switching, the exit provisions under the Pension Fund Regulatory and Development Authority (PFRDA) Exit & Withdrawal Regulations, 2015 (PFRDA Regulations, 2015) will become applicable.

Government Contribution: The Government of India’s(GoI) 4% differential contribution, calculated as per the default investment pattern, will be credited to the National Pension System (NPS) corpus at the time of exit.

About National Pension System (NPS):

NPS: The NPS launched on January 01, 2004, a government-backed, voluntary, defined-contribution retirement savings scheme that aims to provide old-age income security for citizens.

• The PFRDA regulates and administers NPS under the PFRDA Act, 2013.

Introduction: The National Pension System (NPS) was initially introduced for new government recruits (except armed forces). From 1st May 2009, it was extended to all citizens of India, including unorganised sector workers, on a voluntary basis.

Voluntary Model: The NPS voluntary scheme is open to all Indian citizens, including those residing abroad, within the age group of 18 to 70 years.

About Unified Pension Scheme (UPS):

UPS: It is pension scheme introduced by the GoI as an option under the NPS for CG employees with effect from 1st April 2025.

• It operates under the existing NPS architecture by the PFRDA and is applicable to both serving and retired employees.
• It provides an assured, guaranteed pension, with contributions from both employees (10% of Basic Pay + Dearness Allowance (DA)) and the government.

Applicable to: The UPS is available to:

• Existing CG Employees under NPS as on 01.04.2025.
• New Recruits joining Central Government service on or after 01.04.2025.
• Retired NPS Subscribers who superannuated or retired on or before 31.03.2025 with minimum 10 years of qualifying service.

Last Date: The last date to enrol to this scheme is September 30, 2025.

Assured Pension: 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. This pay is to be proportionate for lesser service period upto a minimum of 10 years of service.

Assured Family Pension: 60% of pension of the employee immediately before her/his demise.

Assured minimum pension: Rs. 10,000 per month on superannuation after minimum 10 years of service.

About Pension Fund Regulatory and Development Authority (PFRDA):

It was initially established as a regulatory body to promote, develop and regulate the pension sector in India. Later, it was granted a statutory body status through PFRDA Act, 2013 passed in September 2013 and the same was officially notified on February 1, 2014.

• It comes under the jurisdiction of Department of Financial Services (DFS), Ministry of Finance (MoF).

Chairman- Sivasubramanian Ramann
Headquarters- New Delhi, Delhi