Unified Pension Scheme: Will the Centre make UPS mandatory for state governments? FinMin replies

The Unified Pension Scheme (UPS) will be implemented for Central Government employees covered under the National Pension System (NPS) from April 1, 2025.

The UPS will be available as an option under NPS for employees. Meaning, it is not mandatory for Central Government employees to opt for this new scheme. But, what about state government employees? Will the Central government make it mandatory for state governments to implement UPS?

The answer is no, as the regulation of the service conditions of state government employees is not the responsibility of the Central Government. Rather, all salary and services-related issues of state government employees are handled only by state governments.

Questions on UPS for state employees were raised in the Rajya Sabha on Tuesday (March 25, 2025) by Dr Anbumani Ramadoss. He asked, “whether Government has received any representations from various State Governments accepting, modifying or rejecting the recently introduced Unified Pension Scheme (UPS)” and “whether Government will make it mandatory for all the State Governments to implement the above scheme.”

Replying to the queries, Union Minister of State for Finance, Pankaj Chaudhary said, "The regulation of service conditions of State Government employees falls under the administrative domain of respective State Governments."

The minister further said that UPS has been introduced to address the concerns raised by central Government employees regarding an assured monthly pension after retirement.

"Unified Pension Scheme (UPS) is a defined benefit based contributory pension scheme notified by the Government on 24.01.2025, as an option for Central Government employees covered under National Pension System (NPS), to address the concerns regarding assured monthly payout after retirement," Chaudhary said.

UPS offers an inflation-indexed assured monthly pension, lump sum, and gratuity on retirement. Interested employees can opt for this scheme within three months of the date of implementation. However, employees will not be able to switch to NPS if they opt for UPS.