If you are a central government employee and are confused about the pension scheme, then there is some big news for you. The government has given a special opportunity to the employees. Employees who are currently in the Unified Pension Scheme (UPS) can now switch to the National Pension System (NPS) once and only once. This big decision came through a notification on August 25.
Big decision for government employees
The Finance Ministry has made it clear that this facility will be ‘one-time, one-way’. This means that once you move from UPS to NPS, you will not be able to come back to UPS. This option is only for those employees who have already opted for UPS. According to government data, as of July 20, 31,555 central employees had opted for UPS.
What are the rules of this switch
This facility is not available to all employees. Some special conditions have been laid down for this:
This facility will not be available to employees who are facing dismissal, forced retirement, or disciplinary action.
You can avail this option up to one year before your retirement date, or three months before in case of voluntary retirement.
After this time limit, employees will automatically remain with UPS.
What are the advantages and disadvantages of NPS
If you leave UPS and go to NPS, you will have both advantages and disadvantages. While in UPS, you get a fixed pension and guaranteed benefits, NPS is based on investment. The biggest advantage of NPS is that you get the option of investing in your deposits, which gives the possibility of higher returns.
Apart from this, the government also makes an additional contribution of 4% to your account. However, also keep in mind that in NPS, you will not get any fixed pension amount or guaranteed benefit. The fund received on retirement will depend on the performance of the deposit and investment.
When can you switch
The government has set the last date for switching from UPS to NPS as 30 September 2025. All ministries and departments have been ordered to convey this information to their employees on time. This is a great opportunity for those employees who want to earn higher returns by linking their pension to the market.