Old Pension Scheme To Be Restored? Here's What The Finance Ministry Said

For over two decades, central government employees covered under the National Pension System (NPS) have been demanding that the Centre restore the Old Pension Scheme (OPS), which replaced the NPS in 2004. The Centre has made it clear to employee unions that the OPS will not be brought back. In the monsoon session, the government was once again asked questions about OPS restoration in Parliament.

OPS (Old Pension Scheme)

In this, 50% of the last salary was given as a pension on retirement, and no monthly contribution was taken from the employee.

NPS (National Pension System)

Implemented since 2004, both the employee and the government contribute to it; the pension amount depends on market returns.

UPS (Unified Pension Scheme)

New option under NPS, in which the employee contributes 10% and the government contributes 18.5%, a 50% pension of the salary is assured on 25 years of service.

Finance Minister Nirmala Sitharaman's Reply

In response to a question asked in the Lok Sabha, Finance Minister Nirmala Sitharaman clarified that at present, no proposal to restore OPS is under consideration with the government.

She said that the government distanced itself from OPS because it put an unbearable burden on the treasury. In its place, the National Pension System (NPS) was implemented from 2004, which is a defined-contribution-based scheme.

She further said that “with a view of improving upon the pensionary benefits for such employees, a committee was constituted under the chairpersonship of the then Finance Secretary to suggest measures to modify the NPS. Based on the deliberations of the Committee with stakeholders, Unified Pension Scheme (UPS) has been introduced as an option under NPS with the objective of providing defined benefits after retirement to the Central Government employees covered under the NPS”.

How Many Employees Are Covered Under NPS?

Around 85 lakh central and state government employees are covered under the NPS. All central government departments and autonomous bodies governed by the Centre were brought under the NPS. Only armed forces have been kept out of the NPS purview. Because of the demand for restoration of OPS, the Centre in April this year launched a new pension scheme called Unified Pension Scheme, which guarantees a fixed pension to employees post-retirement.

How Many Employees Are Eligible For UPS?

Out of 23 lakh central government employees who are eligible for UPS, only 1.35% i.e. about 30,989 employees, have opted for UPS so far. This tepid response forced the Centre to extend the deadline for employees to join UPS by 3 months to 30 September 2025.