Synopsis: The Centre has confirmed that the tax benefits available under the National Pension System (NPS) will now also apply to the Unified Pension Scheme (UPS). Operational from April 1, 2025, UPS promises a minimum monthly pension of ?10,000 to eligible central government employees.
In a move to enhance financial security for government employees, the Ministry of Finance has announced that tax benefits under the National Pension System (NPS) will now be extended to the newly introduced Unified Pension Scheme (UPS). This step, effective from April 1, 2025, aims to provide parity between the two schemes and encourage wider adoption of UPS by central government personnel.
According to the Ministry, the same tax reliefs and incentives available under NPS will apply "mutatis mutandis" (with necessary changes) to UPS, ensuring uniformity in tax treatment. These provisions are expected to reduce the financial burden on employees while also encouraging long-term pension savings.
The UPS was introduced as a secure option within the NPS framework for central government civil service recruits. Employees already enrolled in NPS will have a one-time opportunity to switch to UPS. The minimum guaranteed payout under UPS is ?10,000 per month, provided the employee completes at least 10 years of qualifying service without any withdrawal and contributes regularly.
To implement this scheme, the Pension Fund Regulatory and Development Authority (PFRDA) notified its operational regulations on March 19, 2025, under the PFRDA (Operationalisation of the Unified Pension Scheme under NPS) Regulations, 2025.
The initiative aligns with the government’s commitment to providing secure post-retirement income, improving the retirement ecosystem, and empowering public servants with better financial planning tools.
Disclaimer: This article is for informational purposes only. For official updates, employees are advised to consult notifications issued by the Ministry of Finance or the PFRDA.
