Centre Rules Out Old Pension Scheme, Pushes Unified Pension Scheme Despite Low Response

Central government employees under the National Pension System (NPS) have been demanding the return of the Old Pension Scheme (OPS), which was scrapped in 2004. OPS assured 50% of the last drawn salary as pension without any employee contribution.

Govt’s Stand: No OPS Restoration

Finance Minister Nirmala Sitharaman told Parliament that there is no proposal to restore OPS. She explained that OPS created a heavy financial burden, so the defined-contribution-based NPS was introduced instead.

Introduction of UPS

To address concerns, the Centre launched the Unified Pension Scheme (UPS) in April 2025. It ensures:

• Employee contribution: 10%
• Govt contribution: 18.5%
• 50% of salary as pension after 25 years of service

Tepid Response to UPS

Out of 23 lakh central employees eligible, only 30,989 (1.35%) have joined UPS. The poor response led the government to extend the joining deadline till Sept 30, 2025.

Key Differences: OPS vs NPS vs UPS

• OPS: 50% last salary, no employee contribution
• NPS: Contributions from both pensions depend on market returns
• UPS: Mix of both, assured 50% pension with conditions

Why Employees Are Reluctant

• Many still hope OPS will return
• UPS is seen as less secure than OPS
• Concerns over long service requirements and limited family coverage
• Fear of losing flexibility and tax perks under NPS

Read More: Over 11 Lakh EPFO Higher Pension Claims Rejected, Only 4 Lakh Approved!

What Lies Ahead?

The government says OPS is not coming back, but employee dissatisfaction shows UPS still lacks trust. For UPS to succeed, the govt must address concerns around security, flexibility, and family benefits.

Conclusion

While OPS restoration is ruled out, the government is betting on UPS as a middle path. But with low employee participation, its success will depend on building confidence and making the scheme more employee-friendly.

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