Centre has no plans to restore old pension scheme for central employees under NPS: Finance Ministry

Government pension scheme

At a time when various associations representing the central government employees have been demanding the restoration of the Old Pension Scheme, the finance ministry has clarified that there is no such proposal under consideration for its employees who are covered under the National Pension Scheme and Unified Pension Scheme.

“There is no proposal under consideration by the government for the restoration of the Old Pension Scheme (OPS) in respect of central government employees covered under the National Pension System (NPS) or Unified Pension Scheme (UPS),” Pankaj Chaudhary, minister of state in the Ministry of Finance, told Lok Sabha in a written reply dated December 15, 2025.

The minister of state was replying to the questions raised by members of Parliament, Anto Antonoy, Amra Ram, Utkarsh Varma Madhur, and Imran Masoon, on the government’s stance over the issue, including the implementation of OPS by abolishing the NPS and UPS.

Various central government employee associations have demanded restoration of the old pension scheme, which is a non-contributory assured pension framework under the Central Civil Services Pension Rules, 1972 (now 2021).

On the contrary, NPS and UPS are contributory pension schemes sponsored by the Central government, wherein employees contribute 10 percent of their basic pay and dearness allowance for retirement.

Under the NPS framework, the government adds 14 percent of the employee’s basic pay and DA. Under UPS, the government contributes 10 percent of basic pay and DA, as well as another 8.5 percent of the total employees’ corpus under the scheme.

Furthermore, the members of Parliament also raised questions in the Lok Sabha about whether state governments have implemented OPS for their employees. “If so, the process to return the funds deposited with the Centre to the state governments, along with the amount of funds deposited by the states, wherein OPS is in place.”

According to MoS Chaudhary, the state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have informed PFRDA (Pension Fund Regulatory and Development Authority) about their decision to restart OPS for their state government employees.

MoS Chaudhary, citing the PFRDA Act, 2013, read along with the PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, and other regulations, said, “There is no provision in which the accumulated corpus of the subscribers viz government contribution, employees' contribution towards NPS, along with accruals, can be refunded and deposited back to the state government.”

The minister also gave more clarity on the Unified Pension System (UPS), stating that the fund-based pension system relies on the regular and timely accumulation and investment of applicable contributions from both employee and employer for assured payouts to the employees.

The minister said, under UPS, at the time of retirement, a subscriber is eligible to receive benefits as follows:

• Assured payout at the rate of 50% of the average basic pay drawn over the last 12 months prior to superannuation for a minimum qualifying service of 25 years. This payout to be proportionate for a lesser service period up to a minimum of 10 years of service.
• Assured family payout at the rate of 60% of payout admissible to the employee immediately before his/her demise to the legally wedded spouse.
• Assured minimum payout of Rs 10,000 per month on superannuation after a minimum of 10 years of qualifying service.
• Inflation indexation on assured payout, on assured family payout, and on assured minimum payout. Dearness Relief will be based on the All India Consumer Price Index for Industrial Workers (AICPI- IW) as in the case of serving employees.
• Lump sum payment at superannuation in addition to gratuity at a rate of 1/10th of the monthly emoluments (basic pay+DA) as on the date of superannuation for every completed six months of service. This payment will not reduce the quantum of assured payout.
• There is no provision for the return of contributions deducted from the salary of employees during their service, once the payout starts. However, the UPS subscriber or the legally wedded spouse, as the case may be, shall have an option to withdraw an amount not exceeding 60% of the individual corpus or benchmark corpus, whichever is lower.