If you’re a government employee and considering switching from the National Pension System (NPS) to the Unified Pension Scheme (UPS), commonly known as the Old Pension Scheme (OPS), you’re not alone. Across India, many employees are asking one crucial question:
“What happens to your NPS contributions when we move to UPS?”
Let’s understand everything you need to know about this transition, the fate of your accumulated NPS amount, and what it means for your retirement savings.
✅ Understanding NPS and UPS: A Quick Recap
Before we address the question, here’s a simple overview:
🔹 NPS (National Pension System):
A contributory pension scheme where both employee and government deposit a portion of your salary into a pension account. Returns are market-linked, and you receive a lump sum + monthly annuity after retirement.
🔹 UPS (Unified Pension Scheme / Old Pension Scheme):
A non-contributory, guaranteed pension system where employees receive 50% of the last drawn salary as pension for life. No monthly contribution is required from the employee’s side.
🟡 So, What Happens to Your NPS Contributions?
Let’s get to the heart of the question:
When an employee switches from NPS to UPS, what happens to the contributions already made into NPS?
Here’s the truth:
🔸 1. Your NPS Contributions Remain in the NPS Account
Even after shifting to UPS, your NPS corpus (contributions + interest) is not lost. It remains safely invested in your NPS account under PFRDA.
🔸 2. No Transfer to UPS
UPS does not accept or require any employee contributions. Hence, the funds accumulated under NPS cannot be transferred to UPS. The two systems are financially separate.
🔸 3. You May Still Access Your NPS Corpus
Depending on government rules, you may be allowed to:
Keep the NPS account active
Withdraw the entire corpus on retirement
Or use it as an additional retirement benefit, separate from your UPS pension
⚠️ However, this depends on whether your department permits dual benefits. In some cases, the NPS account may be closed, and the funds refunded as per PFRDA norms.
🔸 4. No Automatic Refund Unless Ordered
Unless the government issues specific orders, your NPS contributions will not be automatically refunded or transferred. You may need to apply for withdrawal after retirement as per existing NPS withdrawal guidelines.
📌 Important Points to Consider Before Switching
Before you switch from NPS to UPS, keep the following in mind:
✅ Check Official Guidelines:
Some states have issued orders allowing employees to shift to UPS, but central guidelines may vary.
✅ Understand the Long-Term Impact:
NPS gives you a lump sum + annuity, while UPS gives you a fixed pension. Choose what suits your financial future better.
✅ Tax Implications:
NPS has tax benefits under Section 80C and 80CCD(1B). UPS has a different taxation structure post-retirement.
🧾 Example Case Study
Mr. Rajesh Kumar, a government teacher joined service in 2010 under NPS. In 2024, he opted to switch to UPS as per state policy. His total NPS corpus was ₹9 lakhs.
➡️ After the switch, his NPS account remained active.
➡️ He was allowed to withdraw the NPS corpus after retirement.
➡️ He also started receiving a monthly pension under UPS.
So, in this case, he benefited from both systems.
📣 Final Verdict: Will You Lose Your NPS Contributions?
No, you will not lose your NPS contributions when you switch to UPS. The funds remain secure in your NPS account. However, whether you can withdraw or use them post-retirement depends on the rules of your department or state government.
So, if you’re wondering “What happens to your NPS contributions when you switch to UPS?” – rest assured, your money is safe, but your access to it depends on official policy.
Frequently Asked Questions (FAQ)
🔸 Q1: Will I lose the money I contributed to NPS after switching to UPS?
A: No, you will not lose your NPS contributions. The money remains in your NPS account and is handled as per PFRDA guidelines.
🔸 Q2: Can I withdraw the NPS amount after moving to UPS?
A: Yes, in most cases, you can withdraw the NPS corpus at the time of retirement. However, the withdrawal terms may depend on government policies and departmental rules.
🔸 Q3: Is it possible to transfer my NPS funds into the UPS?
A: No. The UPS (Old Pension Scheme) does not accept personal contributions. Your NPS funds cannot be transferred into the UPS system.
🔸 Q4: Will I receive both UPS pension and NPS benefits after retirement?
A: That depends on your state/department’s policy. In some cases, employees are allowed to retain and withdraw their NPS corpus separately. In others, you may be required to close your NPS account.
🔸 Q5: What happens to the employer’s contribution in my NPS account?
A: Like your contributions, the employer’s contributions also remain in your NPS account and continue to grow until withdrawal.
🔸 Q6: Should I keep my NPS account active even after switching to UPS?
A: If permitted by your department or the pension authority, keeping your NPS account active could give you additional post-retirement benefits. Check with your HR or nodal office.
🔸 Q7: Can I still claim tax benefits under Section 80C if I stop contributing to NPS after switching to UPS?
A: If you no longer contribute to NPS, you won’t be able to claim tax benefits under Section 80C or 80CCD(1B). These benefits apply only when contributions are actively made.
🔸 Q8: Do I need to take any action after opting for UPS regarding my NPS account?
A: Yes, you should consult your Drawing & Disbursing Officer (DDO) or NPS nodal office to confirm the status of your account and ask about closure or withdrawal procedures, if applicable.
