UPS to NPS switch: Central govt launches one-time switch option for UPS to NPS

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In a major move, the Central government has allowed one-time switch from Unified Pension Scheme (UPS) to National Pension System (NPS) for employees. The Government of India, through a notification published in the Official Gazette on September 2, 2025, has introduced the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025. The rules govern service-related matters and benefits of Central govt employees who choose the UPS as an option under National Pension System.

“Under these rules provisions for 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 government clarified in a press statement issued on September 15, 2025.

What comes under new rule:

Under the new rules, employees covered under UPS are allowed to switch to NPS, but only once. Once exercised, this option is final, and subscribers cannot return to UPS. Importantly, the switch must be made at least one year before the date of superannuation or three months prior to voluntary retirement (VRS).

However, the facility will not be available in certain cases. Employees facing removal, dismissal, compulsory retirement as a penalty, or disciplinary proceedings (ongoing or contemplated) will not be eligible for the switch. Those who do not exercise the option within the given timelines will continue under UPS.

Benefits for NPS subscribers: 

Employees who move to NPS will be entitled to all benefits available under the scheme. Additionally, they will also receive a differential contribution of 4%, giving them a financial cushion. The government believes this one-time switch option empowers employees to plan their post-retirement financial security in a more flexible way.

It is worth noting that on August 24, 2024, the Union Cabinet authorised the implementation of a Unified Pension Scheme (UPS). After that, 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.

What the rules cover

• The CCS Rules, 2025, go beyond just the switch option. They also lay down the framework for:
• Enrolment under the Unified Pension Scheme
• Employee and government contributions
• Compensation in case of delays in registration or credit of contributions to NPS accounts
• Options for death or disability benefits under CCS (Pension) Rules or UPS regulations
• Retirement benefits across multiple scenarios—superannuation, premature retirement, VRS, absorption into PSUs/autonomous bodies, invalidation, or resignation
• Impact of compulsory retirement, dismissal, or removal from service
• Effect of pending departmental or judicial proceedings at the time of retirement