To promote the Unified Pension Scheme (UPS), the government has made changes to give tax benefits similar to the National Pension System (NPS) for employees who choose this scheme.
According to a statement by the Finance Ministry on Friday, adding UPS to the tax system is a step to improve retirement security for central government employees. The goal is to offer transparent, flexible, and tax-saving options. The ministry said, “The government has decided that the tax benefits available under NPS will also apply to UPS, as it is an option under NPS.
UPS Was Implemented as an Option Under NPS
These rules make sure that UPS is equal to the existing NPS structure and gives proper tax relief and benefits to employees who choose UPS.
As per a notification from the Ministry of Finance dated January 24, 2025, UPS was started as an option under NPS for central government employees who joined civil services on or after April 1, 2025. After this notification, employees already under NPS were given a one-time option to switch to UPS.
Approved by Union Cabinet in 2024
To put this system in place, the Pension Fund Regulatory and Development Authority (PFRDA) issued the PFRDA (Operation of Integrated Pension Scheme under NPS) Regulations, 2025 on March 19, 2025.
UPS is for those central government employees who are already in NPS and want to choose this option. Around 23 lakh government employees can benefit from this.
The Union Cabinet, led by Prime Minister Narendra Modi, had approved the UPS option on August 24, 2024. NPS was introduced in place of the Old Pension Scheme (OPS), which was stopped in January 2004.