UPS enrollment deadline pushed by 2 months

The Finance Ministry on Tuesday extended the deadline for opting for the Unified Pension Scheme (UPS) by two months, now running until November 30, 2025. The move comes in response to a tepid response from central government employees covered under the National Pension System (NPS).

In a communication to the Pension Fund Regulatory and Development Authority (PFRDA), the Department of Financial Services highlighted that recent positive changes under UPS-such as the switch option, benefits on resignation or compulsory retirement, and tax exemptions prompted stakeholders to request additional time to make their choice. The extension has been approved by the Finance Minister.

UPS, introduced on April 1, 2025, under NPS, is aimed at providing assured pension payouts to central government employees. It is available to existing employees, past retirees, and legally wedded spouses of deceased past retirees. The scheme was initially offered with a three-month window, ending June 30, 2025, which was later extended to September 30, 2025, based on stakeholder feedback.

Despite these efforts, adoption has been low. Out of 23 lakh eligible employees, only around 1 lakh have opted for UPS so far, representing roughly 4.3% uptake. As of July 20, 31,555 employees had joined the scheme. Experts suggest that hesitancy may stem from a lack of clarity about how UPS compares with the existing NPS or the closed Old Pension Scheme (OPS), which provided 50% of the last drawn basic pay.

Unlike OPS, UPS is contributory in nature, with employees contributing 10% of their basic pay and dearness allowance, while the government contributes 18.5%. The scheme is designed to offer more flexibility and assured payouts, bridging the gap between the OPS and NPS while providing additional tax benefits.

The PFRDA has been tasked with updating CRA systems, regulations, and issuing circulars to implement the extended deadline. Analysts believe the additional time could encourage more employees to opt for UPS, particularly those approaching retirement or seeking predictable pension benefits. For many, the scheme represents a middle ground between market-linked NPS returns and the guaranteed OPS payouts of the past.