The Old Pension Scheme was a defined benefit plan for pensioning central government employees in India. Under OPS, retirees were duly paid a pension equal to 50% of the last pay drawn and received additional benefits such as dearness allowance (DA). It was a simple pay-as-you-go system where there were no contributions by employees currently working because pensions were paid out of government revenue.
Further, New Pension Scheme was introduced from January 1, 2004, abolishing the OPS with effect from January 1, 2004, for all new employees.
What Is The Present Position Of The Government Regarding Restoration Of OPS?
Between the year 2025, demands of affluent nature for restoration of OPS have been recurrently stressed by employee unions and groups of retirees. But the Finance Minister, Nirmala Sitharaman, has clarified in Parliament that no such proposal for reinstatement of the Old Pension Scheme with central government employees under NPS is under consideration. This was further affirmed in a reply to Lok Sabha.
Pension benefits have instead been focused upon by the government with newer schemes. Unlike the OPS, the UPS, introduced in 2025, aims to provide assured pension payouts but with contributions required and some restrictions to preserve its fiscal sustainability.
Key Features Of Related Pension Options
Unified Pension Scheme (UPS)
- UPS was introduced as an NPS option for government employees. It seeks to provide more predictable results than pure NPS.
- Employees with at least 25 years of service shall be entitled under the UPS to a pension equal to 50% of the average basic pay for the last 12 months. For those with at least 10 years of service, the minimum pension floor is ₹10,000 a month.
- Recently, the UPS was also amended to provide employees with death-cum-retirement gratuity as is being granted under OPS. This was the staff’s main demand.
Why Is There Still Demand for OPS?
Several reasons exist why employee groups continue to demand OPS restoration:
- Having a higher assured pension and no forced employee deduction, OPS is seen by many as safer.
- The option of utilizing NPS/UPS has, however, remained lukewarm, for as of July 2025, only about 1.35% of employees covered under NPS have opted for UPS.
- Many residents feel that although better, UPS does not completely suit the features and guaranteed nature of OPS.
Also Read: 8th Pay Commission: Fitment Factor Fixed at 2.86, Big Blow to Employees