The Union Government has categorically ruled out the restoration of the Old Pension Scheme (OPS) for Central Government employees covered under the National Pension System (NPS) or the Unified Pension Scheme (UPS).
The clarification was given by the Finance Ministry in a written reply in the Lok Sabha, putting to rest ongoing speculation and demands by sections of employees seeking a return to the pre-2004 pension regime.
Responding to an unstarred question in the Lok Sabha on December 15, 2025, the Minister of State for Finance stated that there is no proposal under consideration to reintroduce OPS for Central Government employees who are presently governed by NPS or UPS. The reply makes it clear that the pension policy of the Centre remains unchanged.
The Finance Ministry further explained that while some State Governments—such as Rajasthan, Chhattisgarh, Jharkhand, Punjab and Himachal Pradesh—have decided to implement OPS for their State employees, the refund of the accumulated NPS corpus to States is not permitted under the existing legal framework. The Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013, along with applicable NPS regulations, does not provide any mechanism for refunding the employer and employee contributions, along with returns, back to State Governments once deposited.
Elaborating on the Unified Pension Scheme (UPS), the government noted that UPS is a fund-based pension system, dependent on regular and timely contributions by both the employee and the employer. Under UPS, subscribers are entitled to assured payouts, including a minimum assured pension, family pension, and lump-sum benefits at the time of superannuation, subject to specified conditions. However, there is no provision for refund of the entire contribution deducted during service to employees at retirement.
The reply also clarified that any withdrawal from the pension corpus under UPS is limited and regulated, and in certain cases, the assured payout may be proportionately reduced. The structure of UPS, the government emphasized, is designed to ensure long-term sustainability of pension liabilities, unlike OPS, which was a non-contributory and defined-benefit scheme.
This clear statement from the Finance Ministry is significant amid persistent demands from employee unions and associations for restoration of OPS. With the Centre firmly reiterating its position in Parliament, the policy direction appears settled, at least for Central Government employees, even as States continue to take divergent approaches within the limits of the law.
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