As part of the ongoing celebrations under Azadi Ka Amrit Mahotsav, the Ministry of Finance has introduced a significant reform in pension planning for Central Government employees. A new one-time, one-way switch facility has been made available for eligible employees currently under the Unified Pension Scheme (UPS), allowing them to shift back to the National Pension System (NPS) under certain conditions.
This step, notified by the Department of Financial Services through Office Memorandum No. 1/3/2024-PR dated 25th August 2025, emphasizes employee choice and flexibility in managing post-retirement security.
Key Highlights of the Switch Facility
One-Time, One-Way Switch Only
Employees under UPS can opt to switch to NPS only once.
Once exercised, this switch is irreversible — there is no going back to UPS.
Strict Eligibility Criteria
The switch can be made only if the employee is not within one year of superannuation or three months of voluntary retirement.
Employees under disciplinary proceedings, or those facing removal, dismissal, or compulsory retirement, are not eligible.
Deadline Alert: 30th September 2025
This facility is time-bound. All eligible employees must exercise the switch option before 30th September 2025.
Similarly, those who wish to opt into UPS from NPS must also do so by 30th September 2025.
Post this date, employees remaining in NPS cannot shift to UPS.
Default Assignment to UPS
If an eligible employee under UPS does not exercise the switch within the allowed timeframe, they will remain under UPS by default.
Why This Matters: Empowering Employees with Financial Choice
This initiative is part of a broader government effort to recognize the diversity in employee financial goals and risk appetite. With different career stages and life circumstances, employees may feel one pension model suits them better than the other. Here’s how the two schemes differ:
NPS: A market-linked, contributory pension scheme that offers greater control and flexibility, with the potential for higher returns but subject to market risks.
UPS: The Unified Pension Scheme, modeled as a defined benefit structure, offers predictability and security — attractive especially for those closer to retirement.
With this one-time switch, the government is acknowledging that employees’ financial priorities may evolve and is offering a mechanism to accommodate those changes.