The government has introduced a one-time switch option allowing Central Government employees who had previously opted into the Unified Pension Scheme to revert to the National Pension System (NPS) before retirement. This reform aims to enhance flexibility and give employees a second chance to choose their retirement plan, balancing the guaranteed benefits of the UPS with the market-linked growth potential of the NPS. It reflects the government’s effort to create a more transparent and choice-driven pension structure.
Key Highlights
- One-Time Switch: Employees covered under UPS can switch to NPS only once and cannot revert to UPS after opting out.
- Deadline: The switch must be exercised at least one year before superannuation or three months before voluntary retirement (VRS).
- Ineligibility: Employees facing dismissal, compulsory retirement, or disciplinary proceedings are not eligible.
- Consequence: Once switched, NPS rules apply—employees will receive market-linked returns instead of the assured benefits of UPS.
- Default Option: If no option is exercised within the timeline, the employee continues under UPS by default.
Conclusion
The switch marks a major step toward pension flexibility. It empowers government employees to choose between assured income security and market-based growth (NPS). However, since the decision is irreversible, employees should carefully assess their financial goals, risk tolerance, and years left in service before opting.
FAQs
1. Who can switch to NPS?
Ans: Central government employees who previously opted for the UPS and meet eligibility and conduct criteria.
2. How many times can one switch?
Ans: Only once—the decision is final.
3. When can the option be exercised?
Ans: At least one year before retirement or three months before VRS.
4. What happens after switching?
Ans: The employee moves to NPS and loses the fixed pension benefit of UPS.
5. What if no decision is taken?
Ans: The employee will remain under UPS automatically.
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