Government employees demanding restoration of the old pension scheme (OPS) have received a major setback from the central government. The government has clarified that no proposal to restore the OPS is currently under consideration. Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that the government will find it difficult to bear the financial burden of the old pension scheme for a long time.
According to the government, relaunching the OPS will continue to increase the financial burden on the government exchequer. Therefore, there is no plan to relaunch it at the central level. The government also clarified that the decision to implement OPS in the states falls within the policy of the respective state governments. Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh have informed the central government and pension fund regulator PFRDA of their intention to transition from NPS to OPS.
The government said that under the current rules, there is no provision to withdraw and return to the state government the employee and government contributions deposited in the NPS, including the earnings earned from it. This means that the process of transition from NPS to OPS is not just limited to a political decision, but also faces numerous financial and legal challenges.
The Unified Pension Scheme (UPS) for central government employees has been implemented as an alternative to NPS from April 1, 2025. It aims to provide more assured pension benefits to employees after retirement. Under UPS, eligible employees get a guaranteed payment of at least ₹10,000 per month after retirement. The scheme is based on regular contributions and investments from both the employee and the government.
According to the government, as on July 7, the total assets under management under NPS for central government employees stood at ₹3.65 lakh crore. The government says that financial stability should be taken into account while making changes to the pension system. Meanwhile, the Comptroller and Auditor General of India (CAG) in its report has also highlighted the financial implications of some states reverting to OPS. Therefore, employees hoping for the restoration of OPS by the central government are unlikely to get any relief.
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