Shamini 
(C): Freepik
What is the Unified Pension Scheme (UPS)?
The Unified Pension Scheme (UPS), beginning 1 April 2025, provides a guaranteed pension option as part of the National Pension System (NPS) for central government employees. Employees with 25 years of service will receive a pension equal to 50% of the average basic pay for the previous 12 months. Employees who have 10-25 years of service will receive pro-rata accrued benefits.
What is the current Dearness Allowance (DA) rate?
On 1 January 2025, the DA for employees of the central government and pensioners increased from 53% to 55% of basic pay/pension, a 2% increase meant to ease inflation. Under UPS, this DA will become “Dearness Relief”, which will attach to pensions on commencement.
How many employees are eligible, and how many have opted?
Over 2.7 million central government employees will be eligible to switch to UPS by 30 June 2025, after which there will be no second chances. So far, fewer than 10,000 employees have switched to UPS.
Read Also: EPS Pension Eligibility & Amount: What 10 Years of Service Means for Your Retirement
Who stands to benefit, and why is awareness low?
UPS is very attractive for long-term employees who want a stable pension income and an inflation-adjusted pension from minimum contributions (10% from the employee plus a central contribution matching and a final approximately 8.5% pooling). There is a status quo in the uptake, probably because of limited knowledge of DA integration and the irrevocable nature of the choice once the deadline passes.
What must employees do next?
If you are an employee with 10 years’ NPS coverage and joined before 31 March 2025, you must complete the relevant forms (A1 or A2) by 30 June 2025. Newly joined staff are required to complete UPS documentation within 30 days of their start date. There is no option to switch after the closing date.
