Many employee unions across the country have been demanding the restoration of the Old Pension Scheme (OPS) for several years now. The issue has repeatedly surfaced in Parliament as well, with many arguing that the National Pension System (NPS), which replaced the OPS over two decades back, exposes employees to market risks.
The government has once again clarified its position on the issue in Parliament while responding to questions in the Rajya Sabha about pension systems for central government employees.
Majority of central govt pensioners still under OPS
According to Minister of State for Finance Pankaj Chaudhary, the Central government currently has around 50.14 lakh employees.
However, when it comes to pensioners, the data shows that a large majority still receive pension under the Old Pension Scheme.
Old Pension Scheme (OPS): Around 69 lakh pensioners
National Pension System (NPS): About 49,802 pensioners (as of January 31, 2026)
This gap exists because the OPS applied to employees who joined government service before January 1, 2004, while the NPS applies to those who joined after that date.
No delay reported in pension payments under NPS
Responding to concerns about pension payments, the government said no cases of delay in monthly pension payments under the NPS have been reported in the last three years.
According to the Finance Ministry, the government and the Pension Fund Regulatory and Development Authority (PFRDA) have not received complaints from subscribers regarding delays by annuity service providers that pay monthly pensions under the NPS framework.
Centre reiterates stance on OPS restoration
The government also addressed the growing demand from several states and employee unions to restore the OPS.
In its response, the Centre said that restoring OPS is a decision that lies entirely with state governments, as pension policies for their employees fall under their jurisdiction.
However, the Comptroller and Auditor General (CAG) has flagged the fiscal risks of reverting to OPS, noting that such moves could put pressure on state finances due to the long-term pension liabilities.
States that have restored the Old Pension Scheme
Despite the fiscal concerns, several states have already reverted to the OPS after pressure from employee unions. These include Rajasthan, Chhattisgarh, Himachal Pradesh, Punjab and Jharkhand.
Some other states have also explored similar proposals or announced plans to shift back to OPS for government employees.
What is OPS, NPS and the new Unified Pension Scheme?
The debate over pension reforms mainly revolves around three systems: OPS, NPS and the newly introduced Unified Pension Scheme (UPS).
Old Pension Scheme (OPS)
OPS was a defined benefit pension system where government employees received a fixed pension after retirement, usually 50% of the last drawn salary, along with periodic dearness allowance revisions. Employees did not have to contribute to the pension fund.
National Pension System (NPS)
NPS is a defined contribution system introduced for central government employees joining service on or after January 1, 2004 (except the armed forces). Both the employee and the government contribute to the pension corpus, which is invested in market-linked instruments. The final pension depends on the accumulated corpus and annuity returns.
Unified Pension Scheme (UPS)
To improve retirement benefits for employees under NPS, the government has introduced the Unified Pension Scheme (UPS) as an option within the NPS framework. The aim is to provide more predictable retirement benefits while retaining the contributory structure.
Push for digital pension services
The government also highlighted steps taken to improve pension services through digital platforms.
A single simplified pension application form has been introduced through the government’s centralized pension processing software Bhavishya, making the application process easier for retiring employees.
In addition, several digital initiatives are now available for pensioners and NPS subscribers, including:
-Digital Life Certificates (DLC) for verifying pension eligibility
-Fully digital exit process for NPS withdrawals and annuity purchase
-SMS and email alerts for updates on pension processing and payments
According to the government, these steps are aimed at improving transparency and making pension services more accessible to retirees.