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Tax Benefits Extended to Unified Pension Scheme

  • 05 Jul 2025

On 5th July 2025, the Finance Ministry announced that tax benefits under the National Pension System (NPS) will now also apply to the Unified Pension Scheme (UPS), making the new scheme more attractive to central government employees.

Key Points

  • Tax Parity Introduced: UPS subscribers will now enjoy the same tax deductions and incentives as NPS users.
  • Scheme Eligibility: UPS is available to new central government civil service recruits from April 1, 2025. Existing NPS subscribers may opt in via a one-time switch.
  • Defined Pension Advantage: Unlike the NPS, UPS assures a predictable retirement income through a defined benefit structure.
  • Contribution Structure:
    • Government contributes 18.5% of basic pay + DA
    • Employee contributes 10%
  • PFRDA Oversight: The Pension Fund Regulatory and Development Authority will regulate both NPS and UPS.