Tamil Nadu Unveils New Pension Scheme Blending NPS and OPS Benefits

The Tamil Nadu government has decided to replace the Contributory Pension System (CPS), which has been in place since April 1, 2003. The new arrangement, called the Tamil Nadu Assured Pension Scheme (TAPS), will apply to state government employees and teachers.  

The change was announced by Chief Minister M K Stalin, following a review of existing pension models. 

How the Decision was Taken 

After the Union government introduced the Unified Pension Scheme for central employees from April 1, 2025, Tamil Nadu constituted a committee in January 2026 to examine its own pension framework.  

The panel reviewed the Old Pension Scheme, CPS and UPS, and submitted its report on December 30, 2025. Based on this review, the state chose a structure that provides a fixed pension while continuing employee contributions. 

Who will be Covered 

TAPS will apply to Tamil Nadu government employees retiring on or after January 1, 2026. New employees joining state service from that date will also come under the scheme.  

Employees currently under CPS who retire on or after the cut-off date will be included, subject to rules yet to be notified. The scheme will be implemented after statutory and accounting procedures are completed. 

Pension Amount and Contributions 

Under the new scheme, eligible employees will receive a monthly pension equal to 50% of their last-drawn basic pay plus dearness allowance. Employees will contribute 10% of their monthly salary to the pension fund.  

The remaining requirement to meet pension payments will be borne by the state government. Dearness allowance revisions will be extended to pensioners and family pensioners every 6 months. 

Family Pension and Gratuity 

If a pensioner dies, 60% of the pension will be paid as family pension to eligible dependants. Gratuity will be paid based on qualifying service, subject to a ceiling of ₹25 lakh.  

The same limit will apply to death gratuity if an employee dies while in service or at retirement. Employees who do not meet the minimum qualifying service will still be eligible for a minimum pension. 

Other Provisions and Financial Impact 

Employees who joined under CPS and retired before TAPS without receiving a pension will be provided a compassionate pension linked to their service period. Pension commutation will be allowed under conditions to be prescribed.  

The state has estimated an initial requirement of about ₹13,000 crore for the pension fund and an annual expenditure of around ₹11,000 crore. Detailed rules and operational guidelines are to be notified separately. 

Read More:  Tamil Nadu Announces New Assured Pension Scheme for Government Employees! 

Conclusion  

The new pension framework will apply to eligible state employees and new recruits from January 1, 2026. Implementation will depend on the notification of rules and prescribed conditions. 

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