With evolving economic challenges and a growing demand for stable retirement income, the Indian government is introducing a significant reform in the form of the Unified Pension Scheme (UPS).
Slated for rollout on August 1, 2025, this scheme has been designed to integrate the best elements of the Old Pension Scheme (OPS) and the National Pension System (NPS). But what exactly is UPS, and why is it considered a major shift for government employees?
The UPS was approved by the Union Cabinet on August 24, 2024, and aims to provide a robust and predictable retirement option. It assures financial stability while maintaining a contributory model.
With potential coverage for up to 90 lakh employees if adopted by state governments, the UPS is much more than just a central policy reform, it could redefine India’s public retirement landscape.
Let’s take a deep dive into the key components, eligibility, benefits, comparisons, procedures, and responses surrounding this pension initiative.
What Is the Unified Pension Scheme?
The Unified Pension Scheme (UPS) is a newly framed retirement benefits plan for central government employees, designed to bridge the gap between OPS and NPS.
Set to be implemented from August 1, 2025, the scheme is rooted in the demand for a secure yet sustainable pension system that supports post-retirement income without overburdening the state exchequer.
Objectives of UPS
- Combine the security of OPS with the flexibility of NPS
- Address long-standing concerns over market volatility in NPS
- Offer defined benefit features without fully reverting to OPS
- Create a hybrid model that supports the government’s fiscal discipline
UPS was approved by the Union Cabinet to assure better financial outcomes for approximately 23 lakh central employees, with a vision to scale up to 90 lakh if adopted by state governments.
Who Is Eligible Under the Unified Pension Scheme in 2025?
Eligibility under the Unified Pension Scheme is categorised into three distinct groups, ensuring broad coverage while maintaining clarity in enrollment conditions.
Eligible Categories
Present Central Government Employees
Those currently under NPS as of April 1, 2025, are eligible to switch to UPS. They must submit their applications by September 30, 2025. Once switched, the decision is final and irreversible.
New Recruits
All individuals joining the central government after April 1, 2025, will automatically be enrolled under UPS. This simplifies the onboarding process and ensures standardisation in pension benefits.
Retired Employees or Spouses
Employees who retired by March 31, 2025, and meet the service criteria, along with their eligible spouses, may also be permitted to enroll.
Contribution Rules
- Employee Contribution: 10% of Basic Pay + DA
- Government Contribution: 18.5%
- No option to opt out once UPS is chosen
- Employees dismissed or resigned voluntarily are excluded
What Are the Key Features and Assured Benefits of the Unified Pension Scheme August 2025?
UPS introduces fixed pension benefits with an emphasis on stability and predictability, addressing concerns that employees often raised regarding the fluctuating nature of NPS.
Highlights of UPS
Pension Calculation
- 50% of the average basic pay from the last 12 months of service
- Minimum assured pension of ₹10,000/month for those with 10+ years of service
- Employees with 25+ years of service receive the full 50%, while those with 10–24 years get proportionate benefits
Family Pension
- In the event of the employee’s demise, 60% of the entitled pension is passed on to the surviving spouse
Inflation Protection
- Regular Dearness Relief (DR) adjustments based on AICPI ensure the pension keeps pace with inflation
Retirement Lump Sum
- One-tenth of the monthly emoluments paid for every six months of completed service
- Paid in addition to gratuity
- Available for withdrawal for education, housing, and medical emergencies
Overview of Key Benefits
| Feature | Description |
| Minimum Pension | ₹10,000/month for 10+ years of service |
| Full Pension Criteria | 50% of average last 12 months’ basic pay |
| Family Pension | 60% of original pension |
| Dearness Relief | Yes, based on inflation index |
| Government Contribution | 18.5% |
| Employee Contribution | 10% |
| Gratuity & Lump Sum | Yes |
How Does the Unified Pension Scheme Compare With NPS and OPS?
Employees often struggle to make an informed decision when multiple pension schemes are on offer. Here’s how UPS stacks up against its predecessors:
OPS (Old Pension Scheme)
- Defined benefit model
- No employee contribution
- 50% of the last drawn salary
- Fully funded by the government
NPS (National Pension System)
- Defined contribution
- Employee: 10%, Government: 14%
- Returns based on the market
- No guaranteed pension
UPS (Unified Pension Scheme)
- Hybrid model
- Employee: 10%, Government: 18.5%
- Guaranteed pension of 50% of average pay over 12 months
- Dearness Relief ensures value preservation
Comparative Table
| Criteria | OPS | NPS | UPS (August 2025) |
| Pension Type | Defined Benefit | Market-Linked | Defined Benefit + Hybrid |
| Contribution | None | 10% + 14% | 10% + 18.5% |
| Inflation Adjustment | Yes | No | Yes (DR linked) |
| Family Pension | Yes | Limited | Yes (60% of base pension) |
| Gratuity | Yes | Limited | Yes |
Why Are So Few Central Government Employees Opting for UPS So Far?
Despite its apparent advantages, the UPS has witnessed low adoption rates since its announcement.
Current Statistics
- Only 30,989 employees out of 23 lakh enrolled under NPS have opted for UPS
- As per a Right to Information (RTI) report and Finance Ministry data (July 2025), the adoption rate is a mere 1.35%
Possible Reasons for Low Response
- Preference for non-contributory OPS
- Uncertainty over new hybrid model
- Lack of clarity in documentation and rollout
- Employees wary of giving up the tax benefits of NPS
Leaders from associations like the Confederation of Central Government Employees & Workers have echoed these concerns, citing employees’ preference for a statutory pension plan with no personal contribution.
What Is the Government’s Response to the Poor Adoption of the Unified Pension Scheme?
In light of the tepid response, the government has taken corrective measures to encourage participation.
Policy Reactions
- Initial deadline of June 30, 2025 was extended to September 30, 2025
- Increased outreach through DDOs and online portals
- Ministry confirmed the finality of the opt-in decision
However, autonomous bodies like Delhi University were not included in the UPS rollout, causing further dissatisfaction. Representatives from DUTA and other university unions have strongly criticised the exclusion.
The lack of granular data by PFRDA on department or cadre-wise participation also creates opacity in adoption trends.
How Can Employees Apply or Migrate to the Unified Pension Scheme Before the Deadline?
The application process for UPS is digital-first and involves submission through designated forms on the official CRA website.
Step-by-Step Application Guide
For NPS Members
- Visit Protean CRA portal
- Select “Migrate from NPS to UPS”
- Fill out Form A1
- Submit to Drawing and Disbursing Officer (DDO) by June 30, 2025 (extended to September 30)
For New Recruits
- Choose “Register for UPS”
- Fill Form A2 for first-time enrollment
For Retirees or Spouses
- Submit appropriate Form B1–B6
- Update family details using Form 2
Forms Summary
| Form Type | Applicant Category |
| A1 | Existing NPS Members |
| A2 | New Recruits (post-Apr 2025) |
| B1–B6 | Retirees or Spouses |
| Form 2 | Family Details Update |
What Financial Security Does UPS Offer Compared to Market Risks in NPS?
One of the biggest criticisms of NPS has been its dependence on market fluctuations. UPS attempts to provide a guaranteed income while retaining some contribution-based discipline.
Key Financial Safeguards in UPS
- Fixed payout model avoids risks tied to market underperformance
- Inflation protection via Dearness Relief
- Lump-sum withdrawal for health, education, and housing
- Structured to ensure fund sustainability with a higher government contribution of 18.5%
This model ensures predictability in retirement, a long-standing demand from public sector employees.
What Are the Long-Term Prospects and State-Wise Expansion Possibilities of UPS?
The UPS is not limited to central government employees. States have the liberty to adopt it, and some have already started considering it.
Maharashtra’s Pilot Adoption
The state of Maharashtra has begun implementing UPS for its employees, a potential sign of national scalability. If other states follow suit, UPS could benefit up to 90 lakh employees across India.
Sustainability Aspect
The government’s 18.5% contribution ensures the fund remains solvent over time. This balance between contribution and benefit is seen as a solution to the OPS-era fiscal stress.
What Should Employees Consider Before Choosing Between UPS, OPS, and NPS?
Choosing a pension scheme is a critical financial decision. Employees must weigh various factors:
Key Considerations
- Risk Tolerance: UPS offers stable income, while NPS carries market risks
- Contribution Willingness: OPS needs no contribution, NPS and UPS do
- Family Security: UPS includes family pension and DR adjustment
- Policy Finality: Switching to UPS is irreversible
Financial advisors suggest mapping personal financial goals, service years remaining, and family requirements before making the final choice.
Conclusion
The Unified Pension Scheme August 2025 emerges as a thoughtful response to the challenges posed by its predecessors. Combining security with sustainability, UPS promises a stable retirement for millions.
However, the low uptake, scepticism among employees, and lack of clarity in institutional application present clear hurdles.
The success of UPS will depend not just on its features but also on how effectively the government communicates its benefits and includes all stakeholders. If these gaps are bridged, UPS could indeed reshape India’s pension future.
Frequently Asked Questions
Is the Unified Pension Scheme mandatory for all central employees?
No, only new recruits after April 1, 2025, are automatically enrolled. Existing employees under NPS can voluntarily opt in before September 30, 2025.
Can an employee switch back to NPS after opting for UPS?
No, the decision to opt for UPS is final. Once chosen, there is no provision to revert.
What happens if an employee doesn’t apply for UPS before the deadline?
Employees who miss the September 30, 2025 deadline will continue under NPS without any further switching option.
Is family pension available under UPS?
Yes, surviving spouses are entitled to 60% of the employee’s original pension amount.
What is the minimum pension guaranteed under UPS?
A minimum of ₹10,000 per month is guaranteed for employees with at least 10 years of service.
Are autonomous institutions like universities included in UPS?
Currently, institutions like Delhi University are excluded, raising concerns among academic staff and unions.
How does UPS handle inflation?
UPS includes regular Dearness Relief (DR) linked to the AICPI to maintain purchasing power post-retirement.
