Hurry! Tomorrow (Sep 30) Is the Last Day to Switch from NPS to UPS

The countdown is on for nearly 23 lakh central government employees who must decide whether to continue with the National Pension System (NPS) or move to the Unified Pension Scheme (UPS), which came into effect on April 1, 2025. The deadline for switching closes on September 30, 2025.

Key Relaxations and Options

• One-time switch: Employees opting for UPS before September 30 can later return to NPS, but only once. However, once they switch back to NPS, they cannot rejoin UPS. This option must be exercised at least one year before superannuation or three months before voluntary retirement.
• Physical form submissions: Recognising possible system overloads, the PFRDA has allowed employees to submit physical forms to nodal offices till September 30. The option is also extended to those on deputation abroad.
• New joinees: Employees who joined between April 1 and August 31, 2025, under NPS, can also migrate to UPS by the September 30 deadline.

Taxation Benefits

The government has amended the Income-tax Act to ensure tax parity between UPS and NPS.

• Contributions by both employer and employee qualify for deductions under Sections 80CCD(1) and 80CCD(2).
• Partial withdrawals (up to 25%) are tax-exempt.
• At retirement, up to 60% of the corpus can be withdrawn tax-free, aligning with NPS rules.
• Lump-sum benefits under UPS, linked to years of service and salary, also enjoy exemptions.

Support Tools

To assist employees, the National Pension Trust launched a UPS vs NPS calculator that helps compare lump-sum payouts and pensions based on service history, pay, and corpus.

Also Read: Step by Step Process to Migrate from National Pension Scheme to the Unified Pension Scheme (UPS)!

Conclusion

With the September 30 deadline tomorrow, central government employees need to make their choice decisively. The UPS offers simplicity and assured benefits, while the NPS provides market-linked growth. Evaluating long-term retirement goals is key before locking in the decision.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.