Starting April 1, government employees have a crucial financial decision to make – whether to opt for the all-new Unified Pension Scheme (UPS) or continue with the existing National Pension Scheme (NPS). The UPS brings a mix of guaranteed benefits and flexible investment options, giving millions of central government employees more control over their retirement savings.
Both new and existing employees are eligible to apply for UPS. While the framework mirrors NPS in several ways, UPS has added layers of government backing and diversified fund allocation that could make it more attractive for the risk-averse.
New Contribution Structure Offers Dual Benefits
Unlike NPS, UPS introduces a two-tiered contribution system for stronger fund management. Employees contribute 10% of their salary, matched by a 10% government contribution into a Personal Deposit Fund. Additionally, the government contributes 8.5% to a separate Pool Deposit Fund, invested in long-term government-backed schemes. This approach ensures both individual investment growth and collective financial security.
| Fund Type | Employee Contribution | Government Contribution | Investment Use |
|---|---|---|---|
| Personal Deposit Fund | 10% | 10% | Managed by selected pension funds |
| Pool Deposit Fund | None | 8.5% | Invested in government schemes |
Choose Your Investment Wisely – Life Cycle Options Available
UPS lets you decide how your contributions are invested. You can choose from multiple investment patterns, including full allocation to government securities or opt for life-cycle-based funds. These include:
- Conservative Plan: Up to 25% equity exposure
- Moderate Plan: Up to 50% equity exposure
If no plan is chosen, your funds will default to a PFRDA-prescribed pattern. This flexibility makes UPS appealing for both risk-averse and growth-focused employees.
Partial Withdrawals Now Allowed – But With Limits
UPS introduces partial withdrawal flexibility after three years of joining. Employees can withdraw up to 25% of their personal fund, with a maximum of three withdrawals throughout the scheme’s lifetime. However, if any amount was withdrawn earlier under NPS, that will be counted toward this limit. Certain criteria must be met to qualify for a withdrawal, keeping the scheme structured yet flexible.
How to Apply: Step-by-Step Guide
For New Joinees (After April 1, 2025):
Fill Form A1 during onboarding.
For Existing Employees (Joined after Jan 1, 2004):
Fill Form A2 to opt for UPS.
For Retirees or Nominees:
Submit Form B2 (retired employees) or Form B6 (in case of death), along with KYC documents.
Online Process to Switch from NPS to UPS:
- Go to: enps.nsdl.com
- Select “NPS to UPS Migration”
- Enter PRAN, DOB, and OTP
- Complete e-sign with VID or Aadhaar
- Confirmation and acknowledgment number issued
Once You Choose, There’s No Going Back
Whether you’re an existing employee or a new recruit, choosing UPS or NPS is a one-time decision. Once you’ve opted in, the choice cannot be reversed. This means employees must consider long-term pension goals, risk tolerance, and desired investment control before finalizing.
Frequently Asked Questions (FAQs)
Yes, if they were previously under NPS. They must submit Form B2 with KYC documents.
Yes, after 3 years of service, up to 25% of personal funds can be withdrawn.
Your funds will be automatically invested under the default pattern set by PFRDA.