New Pension Rule: Centre Allows One-Time Switch From UPS To NPS; UPS Subscribers Can Opt For These Options

In a recent announcement, the Department of Pension and Pensioners' Welfare, on September 2, 2025 in the official Indian gazette, introduced rules for regulating the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) to oversee service issues and advantages under the Unified Pension Scheme for Central Government employees choosing UPS instead of NPS.

In a press announcement dated September 15, 2025, the government said that under these rules, provisions for a one-time switch option from UPS to NPS have also been provided for those who had opted for UPS in the stipulated time lines i.e. September 30, 2025. The UPS subscriber shall have the following options:

• Employees under UPS will only have one time option to switch to NPS.
• The switch can be applied at least one year before superannuation or three months before VRS.
• The switch will not be permitted in case of removal, dismissal, or mandatory retirement as a punishment, or in circumstances where disciplinary procedures are underway or planned.
• Employees who do not switch within the specified period will remain on UPS.
• Subscribers opting for NPS will get NPS benefits and a differential 4% contribution amount.
• On the adoption of NPS, the subscriber will receive NPS benefits and a differential 4% contribution amount.
• This option would provide more flexibility to subscribers in opting for UPS while also allowing them to make an informed choice in planning their financial security after retirement.

Government Notifies CCS Rules, 2025: UPS Under NPS Allows Voluntary Retirement After 20 Years of Service

The Ministry of Personnel, Public Grievances & Pensions published the revised Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025 in a press release dated September 16, 2025.

The service and retirement benefits for central government employees who choose to participate in the Unified Pension Scheme (UPS) are regulated by these regulations, which take effect on September 2, 2025. One important clause guarantees a pro rata payout to employees who want to retire voluntarily after 20 years of service.

Only after 25 years of appropriate service is the entire Assured payout under the Unified Pension Scheme attainable. However, if a subscriber chooses to use VRS after 20 years or more of service, they will get the assured payout pro rata, which is calculated by dividing the year of qualifying service by 25.

"The payout shall be payable from the date of superannuation. The other benefits viz. the Final withdrawal of 60% of Individual Corpus and lump sum benefit of 1/10th of Basic pay and Dearness allowance for each six-monthly period of service, retirement gratuity, leave encashment, CGEGIS benefits can be availed on retirement. Further, in case of death of subscriber after taking VRS but before start of Assured payout, legally wedded spouse shall be granted family payout from the date of death of the subscriber," said the government today in a statement.

Another press announcement issued on 4 September 2025 stated that on August 24, 2024 the Union Cabinet authorised the implementation of a Unified Pension Scheme (UPS). As a result, on January 24, 2025, the Department of Financial Services informed UPS that it was an NPS option or scheme for which NPS-covered employees needed to submit their choice. The UPS is scheduled to go into operation on April 1, 2025.

The Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025 include the following:

• Registration under the Unified Pension Scheme,
• Change facility from UPS to NPS one year before retirement or 3 months before the VRS.
• contributions made by the government and the employee
• In case of delay in registration and credit of contributions to the NPS Account, compensation must be paid to the Government employee.
• In case of a government employee's death or disability while on duty, benefits must be provided under CCS (Pension) Rules or UPS regulations
• Benefits due on retirement on superannuation, premature retirement, voluntary retirement, absorption in an autonomous body or PSU, retirement on invalidation and resignation from service.
• Effect of mandatory retirement/dismissal/removal from service
• Effect of pending departmental/legal at the time of retirement