The Central Government has introduced a positive development for its employees. Those choosing the Unified Pension Scheme (UPS) will now enjoy the same tax benefits as those available under the National Pension System (NPS). This change aims to provide financial support to employees and to enhance the predictability of retirement planning. According to a notification released by the Ministry of Finance, central government employees who opt for the UPS scheme will be granted the same tax exemptions as those under NPS. This implies that tax benefits such as TDS exemptions, and tax deductions under sections 80C and 80CCD(1B), will now also apply to the UPS scheme. Moreover, the deadline to switch to UPS has been extended from June 30 to September 30, 2025. This option is available for both currently employed individuals and those who have retired. Additionally, it extends to the dependents (spouses) of deceased pensioners. The Unified Pension Scheme (UPS) was launched by the central government on April 1, 2025. This plan is available to those who joined central government civil services on or after April 1, 2025. The UPS is seen as a substitute for the NPS, offering workers a secure and stable pension after retirement. The contribution to the UPS is: Central Government: 18.5% (basic salary + dearness allowance), Employee: 10%. The UPS is considered to be more advantageous for individuals who want pension security. A one-time offer has been provided by the central government to all current NPS employees, allowing them to switch to UPS. This is completely voluntary and relies on the employee’s decision. Once UPS is chosen, employees cannot revert to NPS, so making a well-considered decision is important. The advantages of UPS are: NPS-style tax advantages (exemptions under 80C and 80CCD(1B)), guaranteed monthly pension after retirement, a higher contribution from the central government (18.5%), economic stability and security, as well as all income tax advantages. The deadline to make a decision is September 30, 2025. The choice is a one-time opportunity, and the decision is irreversible.
