Old Pension Scheme Restoration 2025
During the Winter Session of Parliament on 15 December 2025, the Ministry of Finance provided crucial information regarding the possible restoration of the Old Pension Scheme (OPS). This statement has brought clarity, but also disappointment, to many government employees.
Background: OPS, NPS, and UPS Explained
Old Pension Scheme (OPS)
Provided a guaranteed pension after retirement, generally 50% of the last drawn salary, along with Dearness Allowance (DA). Employees did not contribute directly from their salary.
National Pension System (NPS)
Introduced in 2004, NPS is a contribution-based pension scheme where both the employee and employer contribute. Pension benefits depend on market-linked investments.
Unified Pension Scheme (UPS)
UPS is a structured, fund-based pension model introduced to ensure a minimum assured payout while retaining the contribution-based framework.
Questions Raised in Parliament on OPS Restoration
During the Winter Session, Members of Parliament raised several important questions reflecting the concerns of millions of government employees:
Finance Ministry's Clear Stand on OPS
The responses were given by the Minister of State for Finance, Shri Pankaj Chaudhary. His reply made the government's position very clear.
No Proposal to Restore OPS for Central Employees
The most important takeaway is that there is currently no proposal under consideration to restore the Old Pension Scheme for central government employees. The Finance Ministry clearly stated that replacing NPS or UPS with OPS is not being considered at present.
This means the long-standing demand for Old Pension Scheme Restoration 2025 has not been accepted by the central government.
Status of OPS in State Governments
The Finance Ministry confirmed that several state governments have independently decided to reintroduce OPS for their employees:
What About the Deposited Funds?
The Finance Ministry clarified that there is currently no provision under existing rules to return the accumulated NPS funds to state governments. As a result, PFRDA has not transferred these funds back to the states.
This issue remains unresolved and continues to be a major point of concern for state governments that have opted for OPS.
Unified Pension Scheme (UPS): Key Features Explained
Since Old Pension Scheme Restoration 2025 is not under consideration, UPS becomes especially important for employees. The Finance Ministry provided detailed clarification on UPS benefits.
Assured Pension Benefits Under UPS
Under UPS, employees are entitled to the following benefits:
- 50% of the average basic salary of the last 12 months as assured pension, provided the employee has completed 25 years of qualifying service.
- Minimum assured pension of ₹10,000 per month for employees who retire after at least 10 years of qualifying service.
- Family pension at 60% of the last admissible payout to the legally married spouse after the employee's death.
- Dearness Relief (DR) will be applicable on the assured pension amount.
- Gratuity benefits based on completed service: For every completed six months of service, gratuity is calculated at 1/10th of monthly emoluments (Basic + DA) at retirement.
- A one-time lump sum payment at retirement, which does not reduce the assured monthly pension payout.
What About Employee Contributions?
One of the most controversial points clarified by the Finance Ministry is that there is no provision to return the employee's contributions after pension payouts begin.
Important Note:
Once UPS pension payments start, the amount deducted from an employee's salary during service will not be refunded. Pension benefits are provided strictly as per UPS rules and conditions.
This aspect continues to fuel dissatisfaction among employees who prefer OPS due to its non-contributory nature.
Final Conclusion
To summarize, the Finance Ministry's statement in Parliament has made it clear that:
No OPS Restoration
Old Pension Scheme Restoration 2025 is not under consideration for central government employees.
State-Level Implementation
Several states have implemented OPS, but their deposited NPS funds have not been returned.
UPS Benefits
UPS offers assured pension benefits, minimum payouts, family pension, DR, and gratuity.
Non-Refundable Contributions
Employee contributions under UPS are not refundable after retirement.
While the debate over Old Pension Scheme Restoration 2025 continues, employees must currently choose between NPS and UPS within the existing framework.
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