What is the pension under UPS?

50% of the average basic pay of the last 12 months for 25 or more years of service, proportionately less for 10 to 25 years, with a minimum of ₹10,000 a month for 10 or more years, plus Dearness Relief.

How much does the government contribute under UPS and NPS?

Under UPS, 18.5% of basic + DA (10% to your account and 8.5% to a pool). Under NPS, 14% to your account. Your own contribution is 10% in both.

Can I switch from UPS back to NPS?

Yes, once. As reported in August 2025, UPS members can move to NPS up to one year before superannuation or three months before voluntary retirement. The switch cannot be reversed.

Do I get gratuity under UPS?

Yes. Retirement gratuity is paid in addition to the UPS lump sum and the assured payout.

Is UPS better than NPS?

It depends on your length of service and risk appetite. UPS gives a guaranteed, inflation-linked income for long service; NPS can give more if markets do well and lets you keep a larger corpus.

UPS vs NPS: how the two pension options compare

Updated 11 October 2026

The Unified Pension Scheme (UPS) and the National Pension System (NPS) are the two pension options for central government employees who joined on or after 1 January 2004. UPS guarantees a monthly payout of 50% of your average basic pay of the last 12 months after 25 years of service, plus Dearness Relief. NPS pays whatever your invested corpus can buy, with no guarantee, but leaves you with more of the corpus.

UPS and NPS side by side

Feature	UPS	NPS
Started	1 April 2025 (notified 24 January 2025)	1 January 2004
Your contribution	10% of basic + DA	10% of basic + DA
Government contribution	18.5% (10% to your account + 8.5% to a pool)	14% to your account
Monthly pension	Assured: 50% of average basic pay of last 12 months for 25 years of service, proportionate from 10 years	Annuity bought with part of the corpus; amount depends on returns and annuity rates
Minimum pension	₹10,000 a month with 10 or more years	No minimum
Inflation protection	Dearness Relief on the payout	None on a standard annuity
Family pension	60% of the payout, plus DR	Depends on the annuity chosen
Lump sum at retirement	1/10 of monthly basic + DA for every completed six months of service, on top of the payout	Up to 60% of the corpus, tax-free

Both schemes come on top of retirement gratuity, and both are regulated by the PFRDA.

How the UPS payout works

Full payout: 50% of the average basic pay drawn in the 12 months before retirement, for 25 or more years of qualifying service.
Shorter service: proportionate. With 15 years, the payout is 15/25 of the full amount, which is 30% of average basic pay. The minimum service is 10 years, and anyone with 10 years or more gets at least ₹10,000 a month.
Dearness Relief is added to the payout and to the family payout, at the same rate as for pensioners under the old scheme.
Corpus: your account still builds up with your 10% and the government's 10%. If it falls short of the benchmark corpus the scheme assumes, or if you withdraw part of it at retirement, the assured payout is reduced in proportion.

Worked example

Worked example. An employee retires after 25 years. Average basic pay in the last 12 months is ₹1,00,000, and last basic + DA is ₹1,60,000 (DA at 60%). UPS: assured payout = 50% × ₹1,00,000 = ₹50,000, plus DR at 60% (₹30,000), so ₹80,000 a month, with DR rising over time. Lump sum = ₹1,60,000 ÷ 10 = ₹16,000 for each six months of service; 25 years is 50 half-years, so ₹16,000 × 50 = ₹8,00,000. Family payout later = 60% × ₹50,000 = ₹30,000 plus DR. NPS: suppose the corpus is ₹1.2 crore. Taking 60% (₹72 lakh) as a tax-free lump sum and buying an annuity with 40% (₹48 lakh) at an assumed 6.5% gives ₹3,12,000 a year, or ₹26,000 a month, which stays fixed. A larger corpus or a bigger annuity share raises this figure; the annuity rate here is an assumption, not a quote.

Which suits whom

UPS suits people who expect to complete 20 to 25 years or more, value a predictable, inflation-linked income, and want strong family protection.
NPS suits people who expect shorter government service, want to keep control of a larger corpus, are comfortable with market risk, or want to leave more money to heirs.
The government contributes more under UPS (18.5% against 14%), but 8.5% goes to a pool that funds the guarantee, not to your own account.

Choosing and switching

Existing NPS employees had to choose UPS by the extended deadline of 30 November 2025. Those who did not opt stayed in NPS.
As reported in August 2025, employees in UPS were given a one-time, one-way option to move back to NPS, up to one year before superannuation or three months before voluntary retirement. On switching, UPS benefits end, and the government's 4% differential contribution is added to the NPS corpus. You cannot return to UPS afterwards.
New recruits get a window to choose at joining. Ask your Drawing and Disbursing Officer (DDO) for the current form and deadline.

Tax treatment

For NPS, the government's 14% contribution is deductible under both tax regimes (section 80CCD(2) of the old Act, now section 124 of the 2025 Act), 60% of the corpus can be withdrawn tax-free, and the annuity is taxed as income. Monthly payouts under UPS are taxed like pension. See NPS tax benefits for details, and run your own numbers in the UPS vs NPS calculator.