• Government dismisses Old Pension Scheme (OPS) reversion. The National Pension System (NPS) replaced OPS on January 1, 2004
• Five state governments, including Rajasthan and Punjab reverted to OPS
• Employees can switch from NPS to the Unified Pension Scheme (UPS) until September 30, 2025
Union Finance Minister Nirmala Sitharaman denied reverting to the old pension scheme (OPS) on August 11, 2025. Through the written reply to the question of restoration of the old pension system in the Lok Sabha, she clarified that there is no such proposal under consideration for the central government employees to return to the old pension scheme. Notably, the OPS was replaced by the National Pension System (NPS) on January 1, 2004. Since then, until April 1, 2025, NPS was the only scheme for central government employees. However, on April 1, 2025, the government implemented the Unified Pension Scheme (UPS), and now central government employees have two pension options (NPS and UPS) to choose from.
While employee associations have been raising demands to revert to the OPS for a long time, it doesn’t seem to happen. As the reply reads, “The Government had moved away from OPS due to its unsustainable fiscal liability on the Government exchequer.”
While non-contributory pension (OPS) seems to be out of question, the government considered offering a guaranteed pension in the form of UPS.
Per the reply, “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.”
Although all central employees (except armed forces) had to mandatorily join NPS since it became effective but there is one exception. According to another reply in the Lok Sabha by Chaudhary, “one-time option to those Central Government civil employees for inclusion under the CCS (Pension) Rules, 1972 (now 2021) who have been appointed against the posts or vacancies which were advertised/notified for recruitment/appointment prior to date of issuing of notification of National Pension System i.e. 22.12.2003”, is permitted.
He further clarified that there is no such proposal for employees of the Public Sector Undertakings and Public Sector Banks.
While the central government cites the reason of unsustainability, some of the state governments reverted to the OPS. These States include Chhattisgarh, Himachal Pradesh, Jharkhand, Punjab, and Rajasthan.
According to a separate reply by Pankaj Chaudhary, Minister of State for Finance, the funds that have been contributed by these state employees so far under the NPS will remain under the scheme, and there is no provision for a refund and deposit back to the State government.
Unlike OPS, NPS is a contributory scheme and does not offer a guaranteed pension, though it offers chances of a sizable retirement corpus due to exposure to the equity market in the long-run.
UPS is a contributory pension scheme. It is designed to offer a guaranteed pension of 50 per cent of the last 12 months’ basic pay that the employee was getting before retirement. However, to get 50 per cent of the pension amount, one must complete a minimum of 25 years of service, or the pension will be reduced proportionately based on the number of work years.
Notably, eligible employees who want to switch from NPS to UPS can exercise their option by September 30, 2025. This deadline has been extended once and may be extended further. The pension, once chosen, cannot be revoked.
