The debate over pension reforms for central government employees has resurfaced ahead of the 8th Pay Commission, with employee unions once again demanding the complete restoration of the Old Pension Scheme (OPS).
The Confederation of Central Government Employees and Workers and the All India Defence Employees’ Federation (AIDEF) have submitted their demands to the drafting committee of the Staff Side of the National Council of Joint Consultative Machinery (NC-JCM). Among the key proposals is the scrapping of both the National Pension System (NPS) and the Unified Pension Scheme (UPS) and a return to the OPS.
This demand has gained renewed attention after data revealed that the response to the newly introduced UPS remained limited.
Weak response to UPS fuels debate
The government recently informed Parliament that only 1,22,123 central government employees had opted for the Unified Pension Scheme (UPS) as of November 30, 2025.
The figure includes new recruits, existing employees and past retirees. Despite repeated extensions of the deadline—from June 30 to November 30, 2025—the adoption remained modest. Out of roughly 23–25 lakh eligible central government employees, the number of UPS subscribers translates to only around 4–5% participation.
Among those who opted for the scheme were 38,569 civil employees and 23,529 railway staff.
The relatively low uptake is being interpreted by employee representatives as a sign of continued uncertainty and dissatisfaction with the pension framework introduced after 2004.
Long-standing demand to restore OPS
The demand to bring back OPS is not new. Central government employee unions have been raising the issue for nearly two decades, ever since the government discontinued the scheme.
The Old Pension Scheme was abolished for new central government recruits from January 1, 2004, and replaced with the new system called National Pension System or NPS.
Under OPS, employees were assured a defined pension linked to their last drawn salary, along with periodic dearness allowance (DA) revisions.
However, under NPS, the pension depends on market-linked returns, which unions argue makes retirement income uncertain.
In the run-up to the 8th Pay Commission, unions again urged the government to include restoration of OPS in the Terms of Reference (ToR) of the commission. However, when the ToR was notified in November 2025, the government did not include this demand.
Government’s consistent stand on OPS
Despite repeated representations from employee unions and questions raised by parliamentarians, the government has consistently maintained that there is no proposal under consideration to restore the Old Pension Scheme.
The government has defended the NPS framework as financially sustainable and necessary to manage the long-term pension burden on the exchequer.
Instead of reverting to OPS, the government introduced the Unified Pension Scheme (UPS) as an alternative option for employees under NPS, aiming to provide more predictable retirement benefits.
OPS vs NPS: Key difference
The core difference between OPS and NPS lies in the nature of pension benefits.
Under OPS, government employees receive a guaranteed pension—generally 50% of their last drawn basic salary, along with DA revisions. The entire pension liability is borne by the government.
Under NPS, both the employee and the government contribute to a retirement corpus, which is invested in financial markets. The final pension depends on market returns and annuity purchase, making it a defined contribution system rather than a guaranteed benefit.
UPS vs OPS: How the new scheme differs
The Unified Pension Scheme (UPS) was introduced as a middle path between OPS and NPS.
UPS promises a minimum assured pension based on service length, while still retaining the contribution-based structure of NPS.
However, unlike OPS, the UPS does not fully guarantee pension based on the last drawn salary, and therefore unions argue that it does not offer the same level of security as the old system.
Why the 8th Pay Commission could face pressure
With the modest adoption of UPS and the long-standing demand for pension reforms, employee unions are expected to intensify pressure during discussions related to the 8th Pay Commission.
Union leaders argue that the weak response to UPS reflects a lack of confidence among employees in the current pension framework and strengthens the case for restoring OPS.
As consultations for the 8th Pay Commission progress, the pension issue could emerge as one of the most debated topics between employee representatives and the government.
Current status of the 8th Pay Commission
The government announced the formation of the 8th Pay Commission on January 16, 2025 to revise salaries, pensions and allowances for central government employees and pensioners.
The Terms of Reference (ToR) and appointment of the commission’s members were notified in November 2025. The panel is currently in the early stages of consultations with stakeholders, including employee unions and government departments.
The commission is expected to review pay structures, allowances and pension frameworks, and submit its recommendations to the government in the coming months.