More Stories

Informist, Tuesday, Nov. 25, 2025

 

By Priyasmita Dutta and Sagar Sen

 

NEW DELHI – Notwithstanding the repeated extensions and multiple awareness campaigns, the government has failed to woo central government staff to switch to the much-touted pension plan--the Unified Pension Scheme. With barely a week left before the scheme's deadline, only 3.6% of employees have opted to switch from the National Pension System so far. "Around 100,000 central government employees have opted for UPS (Unified Pension Scheme) as per the latest figures," two senior government officials said Monday. According to NPS Trust, there are currently 2.92 million central government subscribers enrolled in the National Pension System.

 

"Unified Pension Scheme has not fully addressed the concerns of the staff, which is why there continues to be apprehension on whether this would be the right move," the first official cited above said. "The clamour from central government staff for assured pension like the Old Pension Scheme is just not going away, since for any other set-up, there was already the National Pension System," the official said.

 

The Unified Pension Scheme, which came into effect on Apr. 1, was launched following persistent demand from central government employees for an assured pension scheme. The government originally set Jun. 30 as the deadline to switch to the Unified Pension Scheme, but later extended it to Sept. 30 and then to Nov. 30, given the muted response. At the end of the September deadline, only about 75,000 employees, or less than 3%, had opted for the Unified Pension Scheme, Informist had reported. 

 

The government introduced the defined-contribution National Pension System on Jan. 1, 2004, replacing the defined benefit pension scheme. All states, except West Bengal, joined the new plan. Under the Old Pension Scheme, government employees who have completed at least 10 years of service receive a monthly guaranteed pension based on their last drawn basic salary and the years of service. There was no contribution from the employees under the plan.

 

Combining the National Pension System and Old Pension Scheme, the government announced the Unified Pension Scheme in August last year after numerous rounds of discussions with stakeholders, including employee associations. The launch of the latest pension scheme also came at a time when the unpopularity of the National Pension System among government workers was snowballing into a political issue, with states like Chhattisgarh, Rajasthan, Punjab, and Karnataka switching back to the Old Pension Scheme despite the higher fiscal costs.

 

Unified Pension Scheme retains employee contributions but guarantees a pension equivalent to 50% of the average basic pay drawn in the final 12 months of service. A floor of INR 10,000 per month is set for those with at least 10 years of service. The scheme also includes inflation-indexing to preserve real value.

 

The Unified Pension Scheme provides defined benefits, with employees contributing 10% of basic pay and dearness allowance, while the government contributes another 18.5% towards the pool. The corpus is then invested into government securities and the equity market, based on which their ultimate pension is calculated. On other hand, under the National Pension System, the employee can contribute up to 14% with the government providing a matching contribution. The fiscal implication of the Unified Pension Scheme is higher since the government has to ensure the defined benefit to the pensioner even if the investments do not meet the guaranteed return.

 

Despite these benefits, the transition to the new plan has found few takers. According to the first official, central government employees want greater flexibility to switch between the National Pension System and the Unified Pension Scheme, as they are not fully convinced of the benefits of each scheme. Currently, employees can switch from the National Pension System to the Unified Pension Scheme only once. And, staff who opt for the Unified Pension Scheme at the time of joining service can switch to the National Pension System only once. "In many awareness campaigns or stakeholder consultations, central government employees sought this flexibility."

 

"The approaching deadline may nudge a few more central staff to switch, but it isn't expected to be in significant numbers," the second official said. "Before the September deadline, as high as 3,000 staff joined in a day," the official added.

 

While the decision to further extend the deadline has not yet been taken, both the officials said the Pension Fund Regulatory and Development Authority and Department of Financial Services are discussing the issue and are weighing options. On one hand, it is optics – the fact that the heavily-promoted plan has required repeated reminders and second, maybe a little more time and a few more consultations may attract more takers. Even earlier in the day, the finance ministry issued a press release nudging central government staff to opt for it by Sunday.

 

Even among states, the Unified Pension Scheme has failed to gain traction. Maharashtra was the first state to announce that its government employees will have the option to switch from the National Pension System to the Unified Pension Scheme. However, the scheme has not yet been formally notified by the state. Over the last few weeks, PFRDA and finance ministry officials have held workshops in various states to promote and convince them to notify the scheme, the first official said.   End

 

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.