The Centre confirms it will keep the Unified Pension Scheme as an option alongside the NPS, despite lingering employee concerns and ongoing debates about pension security and flexibility.
The Centre has said it has no plan to alter the Unified Pension Scheme, signalling that the alternative pension option will remain in place alongside the National Pension System for central government staff. Finance Minister Nirmala Sitharaman told the Lok Sabha in a written reply that employees covered by the NPS may choose UPS of their own accord, and that no proposal to revise the rules is under consideration, according to Business Today. The scheme has been in force since 1 April 2025 as an optional arrangement within the NPS framework, as the Pension Fund Regulatory and Development Authority says.
UPS was designed to offer more predictable retirement income than the market-linked NPS. Under the scheme, employees with 25 years of service can receive an assured pension equal to 50% of average basic pay, with dearness relief linked to inflation. The government has also said that a surviving spouse can receive 60% of the pension as family support, while eligible retired employees and certain current workers may also come within the scheme’s scope. A one-time switch back from UPS to NPS has also been set out by the Ministry of Finance for those who opt for UPS.
Even so, employee sentiment appears divided. Manjit Singh Patel, national president of the All India NPS Employees Federation, told Business Today that UPS still requires a 10% employee contribution while the state’s contribution rises, which has not fully eased concerns among staff. Younger employees, the federation says, continue to favour NPS because they can choose their fund manager and investment mix and keep ownership of the corpus in their PRAN account, even though the final payout depends on market performance.
That tension explains why UPS, despite being promoted as a safer and more predictable retirement option, has not displaced NPS in the minds of many workers. Employees weighing the two systems are still having to balance certainty against flexibility, and security against the possibility of higher returns. For now, the government’s position is unchanged: UPS will remain an option within NPS, but not a revamped scheme.
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