The Central Government has made it clear that there is no proposal to reintroduce the Old Pension Scheme (OPS) for its employees. The clarification came from Minister of State for Finance Pankaj Chaudhary, who addressed the issue in a written reply in the Lok Sabha on December 15, 2025. His statement puts to rest speculation and growing demands from employee associations seeking a return to the non-contributory pension system.
In his reply, the finance minister stated that central government employees covered under the National Pension System (NPS) and the Unified Pension Scheme (UPS) will continue under these frameworks, as the government has no plan to revive OPS. This response was given amid persistent appeals from various central government employee unions that have been urging the Centre to roll back NPS and bring back the old system.
According to the government, both NPS and UPS are contributory pension schemes, meaning employees must contribute a portion of their salary toward their retirement corpus. In contrast, the Old Pension Scheme was a non-contributory and assured pension system, where employees were not required to make any financial contribution during their service period.
The issue of OPS was raised in Parliament by several Members of Parliament, including Anto Antony, Amra Ram, Utkarsh Verma Madhur, and Imran Masood. They sought clarity on whether the Centre was considering restoring the old pension structure for its workforce.
Responding to their query, Pankaj Chaudhary categorically stated, “There is no proposal to reintroduce the Old Pension Scheme for central government employees covered under NPS and UPS.” The statement reflects the government’s consistent policy stance over the years on pension reforms.
The Old Pension Scheme was governed by the Central Civil Services (Pension) Rules, 1972, later revised in 2021. Under OPS, employees received a guaranteed pension amount linked to their last drawn salary, without contributing any portion of their income. Due to this assurance, OPS has remained popular among government employees.
However, the government replaced OPS with NPS in 2004 for new central government recruits, citing rising pension liabilities and long-term fiscal sustainability concerns. Under NPS and UPS, pension payouts are market-linked, making returns dependent on investment performance rather than fixed guarantees.
Under the National Pension System (NPS), employees contribute 10% of their basic pay and dearness allowance (DA) toward their pension fund. The government contributes 14% of the employee’s basic pay and DA, which is credited to the employee’s pension account.
In the Unified Pension Scheme (UPS), the contribution model is slightly different. The government contributes 10% of basic pay and DA, along with an additional 8.5% contribution to the employee’s total pension corpus. Despite these contributions, employees’ associations argue that NPS and UPS do not offer the same level of financial security as OPS.
MPs also asked whether any state governments had opted to restore OPS or adopt alternative pension models for their employees. In response, the finance minister informed the House that Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have formally communicated to the Pension Fund Regulatory and Development Authority (PFRDA) about their decision to implement UPS for state government employees.
This highlights the divergence between the Centre and some states on pension policy, even as central employees continue to demand a return to the old system.
The National Pension System was introduced in 2004 for central government employees, replacing OPS for new entrants. In 2009, NPS was extended to the general public, allowing private sector employees and self-employed individuals to invest in a structured, long-term retirement savings scheme.
The government maintains that NPS is designed to ensure financial sustainability and long-term pension security, while reducing the burden of unfunded pension liabilities on the exchequer.
Despite sustained pressure from employee unions and growing political debate, the Central Government has firmly reiterated that the Old Pension Scheme will not be reinstated for central government employees. With NPS and UPS remaining the cornerstone of India’s pension framework, the focus, for now, appears to be on strengthening contributory systems rather than returning to guaranteed pensions.
This clear statement in Parliament signals continuity in pension policy and provides much-needed clarity to millions of serving and future central government employees across the country.
