2 days ago
Unified Pension Scheme to get tax benefits at par with NPS: Finance Ministry
The government has extended tax benefits to employees opting for the Unified Pension Scheme (UPS), bringing them at par with those available under the National Pension System (NPS), reported PTI, citing the Finance Ministry as saying on Friday.
The move aims to encourage adoption of the UPS by central government employees by offering a tax-efficient retirement option under the existing pension framework. 'The government has decided that tax benefits as available under NPS would apply mutatis mutandis to UPS as it is an option under NPS,' the ministry stated.
This step is part of a broader effort to ensure retirement security through transparent and flexible pension mechanisms. It ensures parity with the current NPS and provides tax relief and incentives for government employees choosing UPS.
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The UPS was introduced via a Finance Ministry notification dated January 24, 2025, and came into effect on April 1, 2025. It is available as a one-time option to central government civil service recruits who are covered under NPS, which has been in place since January 1, 2004.
To implement the scheme, the
Pension Fund Regulatory and Development Authority
(PFRDA) issued regulations on March 19, 2025, titled PFRDA (Operationalisation of the Unified Pension Scheme under NPS) Regulations, 2025.
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The scheme can be availed by approximately 23 lakh central government employees. It follows the Union Cabinet's approval of the UPS on August 24, 2024, under the chairmanship of Prime Minister Narendra Modi.
Under the earlier Old Pension Scheme (OPS), which was discontinued in 2004, government employees received 50 percent of their last drawn basic pay as pension.
