Only 4% of NPS Subscribers Opt for UPS, Government Data Shows

The central government has revealed that only 4% of National Pension System (NPS) subscribers have opted for the newly introduced Unified Pension Scheme (UPS). The disclosure comes amid ongoing tussles between the Centre and several opposition-ruled states over pension reforms.

The UPS, announced in August 2024, was designed as an alternative to the NPS, offering a guaranteed pension amount based on the average earnings of the last 12 months before retirement. It also provides a minimum pension of ₹10,000 per month and family pension benefits. The scheme was rolled out from April 1, 2025, after several states, particularly those governed by opposition parties, stopped contributing to the NPS and demanded a return to the old defined-benefit pension scheme.

According to government figures presented in Parliament, only a small fraction of the existing NPS subscriber base has chosen to move to the UPS. The low uptake has raised questions about the attractiveness of the new scheme among central government employees, who are the primary target group. While the NPS has 2.3 crore subscribers across the country, including state and central employees, the UPS is applicable to central government employees who joined after January 1, 2004. States are also allowed to adopt the scheme.

The government has maintained that the UPS offers a better balance between pension security and fiscal responsibility. The scheme's design ensures that the government covers any shortfall in investment returns, thereby guaranteeing a fixed pension amount. However, the low adoption rate suggests that many employees may still be wary of switching due to unfamiliarity or a preference for the existing system's flexibility.

The political context is significant. Several opposition-ruled states, including Rajasthan, Chhattisgarh, Jharkhand, and West Bengal, had either stopped contributing to the NPS or formed committees to explore a return to the old pension scheme (OPS). These states argued that the NPS, which is market-linked, exposes employees to volatility and lacks the assured benefits of the OPS. The Centre's decision to introduce the UPS was seen as a response to these demands, but the lukewarm response from subscribers indicates that the scheme may not fully address their concerns.

Experts note that the 4% uptake figure is a preliminary indication. Many employees may be waiting for more clarity on the scheme's rules or for their respective state governments to announce their own adoption of the UPS. The government has given employees a one-time option to choose between the NPS and UPS, and the window remains open until February 2025 for central employees. The final numbers could change.

Furthermore, the government has also announced that it will provide an option for employees who retired before the UPS was notified to switch to the new scheme, subject to certain conditions. This could influence the overall uptake in the coming months.

The development is being closely watched as a test of the government's pension policy. While the UPS has been designed to provide a safety net, the low initial response may prompt further modifications to make it more appealing. For now, the government appears to be sticking to its position that the UPS is a robust scheme that combines assured returns with fiscal prudence.

In conclusion, the government's disclosure of the 4% uptake rate for the UPS highlights a significant challenge. It underscores the need for greater awareness and trust-building among employees, especially those who had hoped for a full restoration of the old pension scheme. As the deadline for switching approaches, both the Centre and state governments will need to ensure that employees have all the information they need to make an informed choice.