The Union Ministry of Finance has officially clarified that there is no proposal under consideration to restore the Old Pension Scheme (OPS) for central government employees. This statement comes despite a surge in demand from employee unions following a lukewarm response to the newly launched Unified Pension Scheme (UPS).
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The Current Deadlock: Tepid Response to UPS
Launched on April 1, 2025, as a hybrid “middle path” between the market-linked NPS and the non-contributory OPS, the UPS has struggled to gain traction.
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The Numbers: As of the final deadline on November 30, 2025, only 1.22 lakh employees opted for the UPS out of an eligible pool of nearly 23 lakh.
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The Extension: The low enrollment forced the government to extend the deadline multiple times from its original June 2025 cutoff, yet the majority of staff remained hesitant.
Key Differences: OPS vs. NPS vs. UPS (2025)
| Feature | Old Pension Scheme (OPS) | National Pension System (NPS) | Unified Pension Scheme (UPS) |
| Contribution | Non-Contributory (Govt pays) | Contributory (10% Employee) | Contributory (10% Employee) |
| Pension Amount | Assured 50% of Last Basic Pay | Market-linked (No guarantee) | Assured 50% of Avg Basic Pay |
| Minimum Pension | Not defined | Not defined | ₹10,000 per month |
| Inflation Protection | Yes (Dearness Relief) | No | Yes (Dearness Relief) |
| Family Pension | Yes | Depends on Annuity | Yes (60% of Pension) |
Why Employees Are Skeptical of UPS
Despite the “assured” nature of UPS, employee associations continue to demand OPS for two primary reasons:
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Contribution Requirement: Unlike OPS, which is fully funded by the state, UPS requires employees to contribute 10% of their Basic Pay + DA.
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Refund of Corpus: Parliament recently clarified that employee contributions deducted during service will not be returned as a lump sum once the monthly UPS payout begins. Employees can only withdraw up to 60% of the corpus at retirement, which then reduces their monthly pension.
The Stand-off with State Governments
Several states—including Rajasthan, Punjab, Chhattisgarh, Jharkhand, and Himachal Pradesh—have already informed the PFRDA that they are reverting to OPS for state staff. However, a major legal hurdle remains:
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The “Locked” Funds: Minister of State for Finance Pankaj Chaudhary confirmed in the Lok Sabha on December 15, 2025, that there is no legal provision under the PFRDA Act, 2013 to refund the accumulated NPS corpus (government and employee contributions) back to the state governments.
Conclusion
The central government maintains that the OPS is fiscally unsustainable and that the UPS provides a balanced safety net without bankrupting the exchequer. However, with the 8th Pay Commission deliberations currently underway, the pension debate is expected to remain a flashpoint in national politics throughout 2026.
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Disclaimer: This report is based on written responses provided in the Lok Sabha and PFRDA data as of December 28, 2025. Final pension choices are subject to individual service records and departmental guidelines…
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