Is Government Bringing OPS Back? Here's What Finance Minister Told Lok Sabha

File Photo

New Delhi: Finance Minister Nirmala Sitharaman on Monday told the Lok Sabha that there is no proposal to restore the Old Pension Scheme (OPS) for central government employees currently under the National Pension System (NPS).

She said the government had shifted away from OPS because it created an unsustainable fiscal burden on the exchequer.

To improve retirement benefits for NPS-covered employees, a committee headed by the then Finance Secretary was formed to suggest changes. Based on its recommendations, the government has introduced the Unified Pension Scheme (UPS) as an optional upgrade within NPS to provide defined retirement benefits for central government staff.

According to the minister, the UPS has been designed to ensure assured payouts after retirement while maintaining fiscal sustainability. Employees opting for UPS will also be eligible for benefits under the Central Civil Services (Pension) Rules, 2021, or CCS (Extraordinary Pension) Rules, 2023, in cases of death during service, invalidity, or disablement.

Key Differences – OPS, NPS, and UPS

OPS (Old Pension Scheme) – Fully government-funded, with no employee contribution. Provided 50 percent of last drawn basic pay as pension, adjusted for inflation.

NPS (National Pension System) – Introduced in 2004; a defined contribution plan where employees contribute 10 percent of salary and the government 14 percent. Pension depends on market returns; no guaranteed amount.

UPS (Unified Pension Scheme) – Effective April 2025; combines assured pension benefits with a contributory structure. Fully funded and designed to be financially sustainable, avoiding the unfunded liabilities of OPS.