No Return of Old Pension Scheme for Central Govt Staff, Says Finance Ministry Despite Poor UPS Response

The demand to bring back the Old Pension Scheme (OPS) for central government employees has resurfaced after the Unified Pension Scheme (UPS) failed to attract many takers. Out of nearly 23 lakh eligible employees, only about 1.22 lakh opted for UPS, despite deadline extensions.

This low response has strengthened calls from employee unions and opposition leaders to restore OPS, which offers a guaranteed pension linked to the last drawn salary.

Government’s Clear Stand on OPS

Replying in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the Centre has no proposal to bring back OPS for central government employees. He clarified that employees covered under the National Pension System (NPS) or UPS will continue under these schemes.

The government reaffirmed that OPS will not be restored at the central level.

Why OPS Remains Popular

OPS is preferred by many government employees because it provides a fixed pension equal to 50% of the last drawn basic salary, along with dearness relief. It is fully funded by the government and does not require employee contributions.

In contrast, both NPS and UPS are contribution-based, where pension payouts depend on the accumulated corpus and returns.

States That Have Reintroduced OPS

Some states, including Rajasthan, Punjab, Chhattisgarh, Jharkhand and Himachal Pradesh, have informed the pension regulator that they are shifting back to OPS for their employees.

However, the Centre clarified that there is no provision to return NPS funds already deposited, including employee and government contributions and investment gains. This limits how states can implement OPS in practice.

What Is UPS and Why Employees Are Hesitant

UPS was introduced as a middle path between OPS and NPS. It promises assured payouts while remaining fund-based. Key features include:

• Assured pension of 50% of average basic pay (after 25 years of service)
• Minimum pension of ₹10,000 per month
• Family pension at 60% of the employee’s payout
• Inflation-linked increases
• Lump sum payment at retirement

Despite this, many employees remain unconvinced as UPS still requires contributions and does not fully match the certainty of OPS.

Key Concern Around Contributions

A major concern is that employee contributions are not fully returned once pension payouts begin under UPS. While up to 60% of the corpus can be withdrawn at retirement, this reduces the monthly pension, which discourages many employees.

Read More, PFRDA Expands Investment Scope: Pension Funds Can Now Invest in Gold and Silver ETFs! 

OPS vs NPS vs UPS at a Glance

• OPS: Guaranteed pension, no employee contribution
• NPS: Market-linked, contributory, no assured pension
• UPS: Contributory with minimum assured pension and inflation protection

Conclusion

Despite rising demands and a poor response to UPS, the Centre has clearly ruled out restoring OPS for central government employees. While some states have reverted to OPS, the central government remains committed to continuing with NPS and UPS, keeping the pension debate alive.

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