The demand to bring back the Old Pension Scheme (OPS) for central government employees has once again come under the spotlight in Parliament, especially after the tepid response to the Unified Pension Scheme (UPS) despite multiple deadline extensions.
According to official data shared in the Lok Sabha, only 1.22 lakh central government employees have opted for UPS out of nearly 23 lakh eligible employees, even after the government extended the deadline till November 30. The low uptake has strengthened demands from employee unions and opposition MPs for a return to OPS, which guarantees a fixed pension linked to last drawn salary.
However, the government has made its position clear.
Replying to a set of questions in the Lok Sabha on December 15, Minister of State for Finance Pankaj Chaudhary said that there is no proposal under consideration to restore OPS for central government employees covered under either the National Pension System (NPS) or the Unified Pension Scheme (UPS).
Why OPS is still in demand
OPS remains popular among government employees because it offers assured lifelong pension without requiring employee contributions. Under OPS, employees receive a pension equal to 50% of their last drawn basic pay, along with dearness relief, fully funded by the government.
In contrast, NPS and UPS are contribution-based systems, where both the employee and the employer contribute during service years. The final pension depends on accumulated corpus and investment returns.
Despite the introduction of UPS as a middle path—offering assured payouts—the data suggests that a vast majority of central employees are not convinced.
Government firm: No return to OPS
In a direct response to whether OPS would be restored by abolishing NPS and UPS, the finance ministry categorically ruled it out.
“There is no proposal under consideration of the Government for restoration of Old Pension Scheme (OPS) in respect of Central Government employees,” the minister stated in the House.
The reply also clarified that while some states have opted for OPS, the Centre has not changed its stance for central government staff.
States that brought back OPS — but with limitations
The government confirmed that Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the pension regulator, PFRDA, about restarting OPS for their state employees.
However, the Centre clarified that there is no legal provision to return NPS funds already deposited—including employee contributions, government contributions and investment gains—back to the states.
This has created operational challenges for states that reverted to OPS, as accumulated pension corpus under NPS cannot be refunded or transferred back under existing regulations.
What is UPS and why employees remain sceptical
The Unified Pension Scheme was introduced as an alternative to NPS, promising assured pension benefits while remaining fund-based.
Under UPS, an employee with 25 years of service is eligible for an assured payout of 50% of the average basic pay of the last 12 months before retirement. The payout is proportionately reduced for shorter service, with a minimum qualifying service of 10 years.
Key UPS features include:
Minimum assured pension of ₹10,000 per month
Family pension at 60% of the employee’s payout
Inflation indexation linked to AICPI-IW
Lump sum payment at retirement, in addition to gratuity
Despite these assurances, employees remain wary because UPS, like NPS, is contribution-driven and does not fully replicate OPS’s non-contributory nature.
Key concern: No return of contributions
One of the biggest concerns flagged by MPs relates to whether employees get their deducted contributions back at retirement.
The government clarified that there is no provision for returning employee contributions once pension payouts begin under UPS.
However, UPS subscribers are allowed to withdraw up to 60% of the corpus at retirement, subject to a proportionate reduction in monthly pension.
This clause has been a sticking point for many employees who prefer the certainty and simplicity of OPS.
OPS vs NPS vs UPS: What’s the difference?
OPS: Non-contributory, assured pension linked to last salary, fully funded by government.
NPS: Market-linked, contributory system with no guaranteed pension amount.
UPS: Fund-based like NPS, but with assured minimum payouts and inflation protection.
While UPS attempts to bridge the gap, the poor response suggests that employee trust still lies firmly with OPS.
The road ahead
With the government firmly ruling out OPS restoration at the Centre and UPS failing to gain traction, the pension debate is far from over. Employee unions are likely to continue pressing for OPS, especially as more states shift back to the old system.
For now, however, the Centre’s stand remains unchanged: OPS will not return for central government employees.