Think about your retirement after giving your 100 percent for numerous years, and now suddenly you are not sure about your monthly income just because of the high costs of things and the uncertainty in the markets. The fear of such a scenario has brought people working in the Indian government to express the strong wish to have the Old Pension Scheme (OPS) back.
Understanding the Old Pension Scheme
The OPS which was widely accepted and practiced till 2004 in fact, was a defined benefit pension scheme. Fifty percent of the last salary drawn by the retiree was paid to him/her in addition to the dearness allowance (DA) which was given to counterbalance inflation. The scheme did not require any employee contributions which made it very appealing to government employees.
The Shift To NPS And Employee Concerns
NPS debuted in 2004, and it is market-linked. Employees and employers contribute (10% and 14% respectively), thus forming a corpus that is invested in securities.
In strong markets, returns can even be above OPS and thus the option of transferring and withdrawl is available. Nevertheless, the downside of the NPS is that uncertainty from the market leads to dissatisfaction. Employees who are in the verge of retiring are especially those who want the predictability of OPS over the NPS volatility.
State-Level Revivals In 2025
In many cases, states have restored OPS as a fulfillment of electoral promises. At the end of June 2025, the states where such implementations are successfully conducted are Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh.
The moves are a big win for the state’s employees, who are guaranteed pensions. Trade unions see them as victories for the security of workers. Critiques by organizations like the RBI assert that the states’ budgets will suffer from long-term fiscal strains.
Central Government’s Stance: Introducing UPS
The center has been very clear that there will be no revival of the OPS at the national level and has given the reason of the unsustainable costs. This was reiterated by Finance Minister Nirmala Sitharaman when she spoke in Parliament about 2025.
| Feature | OPS | NPS | UPS |
|---|---|---|---|
| Pension Type | Defined benefit (guaranteed) | Defined contribution (market-linked) | Assured benefit (guaranteed) |
| Employee Contribution | None | 10% of salary + DA | 10% of salary + DA |
| Government Contribution | Full funding | 14% | 18.5% |
| Pension Amount | 50% of last salary + DA | Depends on corpus & annuity | 50% of average basic (25+ yrs) |
| Inflation Protection | Full DA revision | Partial (annuity dependent) | Full DA revision |
| Lump Sum | Gratuity only | Up to 60% withdrawable | Additional service-based |
| Fiscal Impact | High (unfunded) | Low (funded) | Moderate (funded) |
Future Outlook Amid Ongoing Debates
Employee unions are still very active in their demand for complete restoration of the OPS especially with the 8th Pay Commission already in process. Protests and demands bring forward the intergenerational equity issues raised.
