New NPS Guidelines To Set Up A Pension Process Like OPS: Key Details

The pension authority, Central Pension Accounting Office (CPAO) recently issued a notification regarding updated guidelines for timely disbursal of pensions under the National Pension System (NPS). CPAO, in a circular issued on March 12, 2025, reinstated that the officials involved in processing NPS pension cases must adhere to the same procedures as outlined for the Old Pension Scheme (OPS). The initial notification was directed on December 18, 2023.

In the initial circular, the pension accounting body detailed guidelines which asked the officials to implement the NPS processing method like that of OPS to ensure timely disbursal of pension to retired employees. The recent Office Memorandum (OM) has urged Pay and Accounts Offices (PAOs) to follow the order.

What Did CPAO Say?

The notification by CPAO states that in some specific cases, PAOs are submitting three copies of provisional PPOs during the submission of NPS cases. Here’s what the instructions say:

• The officials are asked to submit two copies of PPO booklets which include the pensioner’s and the disburser's portion.

However, the pension accounting body noticed that some offices are still submitting provisional PPOs with three copies instead of the required two PPO booklets. As a result, this has caused unnecessary delays in the disbursement of pension amounts.

To streamline and make the process quicker, CPAO has again requested all relevant offices including CCAs, CCAs, AGs, and authorised bank CPPCs to follow the mandated guidelines strictly.

“In view of the above, all the PR. CCAs/CCAs/CAs (with independent charge)/AGs are requested to instruct the PAOs under their control to strictly adhere to the guidelines issued in the previous OM dated 18.12.2023 by the CPAO. Similarly, all the CPPCs of the authorised Banks are also requested to go through the OMs issued by this office and subsequent orders in this regard and act accordingly,” the official order noted.

The process is expected to expedite pension disbursal for retired employees and guarantee that NPS retirees receive their pensions on time without any delays.

What Is NPS?

Introduced in 2004, NPS was launched to replace the OPS for government employees. It was later expanded in 2009 to include private-sector employees, self-employed individuals and Non-resident Indians (NRIs).

Also, this pension system is fundamentally different from the OPS wherein NPS is a market-linked pension scheme - meaning that your invested retirement savings depend on the market performance of the investment.

In NPS, employees regularly contribute to their retirement fund and can utilise 40 per cent of the accumulated corpus for an annuity upon retirement (at the age of 60) and withdraw the remaining 60 per cent without incurring any taxes.

Mandatory contributions are needed in NPS throughout the service period.

What Is OPS?

Before the introduction of NPS, government employees were enrolled in the OPS which was known for its defined structure. OPS provided retirees with a guaranteed pension based on the financial basic salary they received and their years of service.

In order to qualify for OPS, employees need to have a minimum of ten years of service.

The pensioners under OPS receive a fixed pension amount upon retirement. This amount is supplemented by biannual dearness allowance revisions which offsets inflation. The family continues to receive the pension in the event of the unfortunate death of the pensioner.

As per the new CPAO guidelines, the processing of employees' pensions under NPS is supposed to be similar to the process of OPS. This change intends to make pension disbursement faster for the NPS beneficiaries.