Old Pension Scheme – If you’re a government employee or simply interested in public sector reforms, you’ve probably heard a lot of buzz about the Old Pension Scheme (OPS) recently. The question that’s on many people’s minds is—Are we going back to the old system? While nothing has been finalized yet, discussions around the OPS are definitely picking up pace in May 2025, with growing interest from both the central and state governments.
Let’s break down what OPS is, how it compares to the current system, and whether it’s really making a comeback.
What Was the Old Pension Scheme All About?
Before 2004, government employees in India were covered under the Old Pension Scheme. It was a defined benefit plan, meaning the pension amount was guaranteed based on the employee’s last drawn salary and the number of years served. There was no direct investment by the employee, and more importantly, no market risks. Once someone retired, they were assured of a steady income for life.
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However, in 2004, the government introduced a new system called the New Pension Scheme (NPS), now widely known as the National Pension System. The idea was to shift some of the financial burden away from the government and move toward a more sustainable, market-driven model.
So, What’s the Difference Between OPS and NPS?
The core difference lies in the certainty of benefits.
Under OPS, employees knew exactly what they’d get after retirement—it was fixed, predictable, and backed by the government. But this system also created a massive long-term financial liability for the government, especially as life expectancy increased.
In contrast, the NPS works like a savings plan. Both the employee and the government contribute to the pension fund during the working years. This money is then invested in market-linked instruments, and the final pension depends on how those investments perform. That means there’s potential for higher returns, but also a chance of lower payouts due to market fluctuations.
While NPS is financially more viable for the government, many employees feel it lacks the security and assurance that OPS offered.
What’s Happening With OPS Right Now?
As of May 2025, the central government has not made any official move to bring OPS back nationwide. There have been high-level meetings within the finance ministry, and the topic has been discussed seriously, but no concrete policy change has been announced yet.
That said, some states are moving ahead with their own decisions. Rajasthan, Chhattisgarh, and Himachal Pradesh have already reinstated OPS for their state government employees. States like Punjab and Jharkhand are also actively planning to do the same. These steps have largely been taken in response to pressure from employee unions and public sector workers, many of whom have been protesting and organizing demonstrations in support of OPS.
Why Is There So Much Support for OPS?
The push to return to OPS is mostly coming from employee unions. Many workers feel that NPS doesn’t offer the kind of safety net they need in retirement. Since market conditions can be unpredictable, they’re worried that their retirement income under NPS might not be enough, especially with rising inflation and healthcare costs.
Moreover, government jobs have traditionally come with the promise of stability, and for many, OPS was a big part of that. With NPS, that promise feels weakened.
Could the Central Government Bring OPS Back?
There’s no clear answer yet, but it’s possible. With more states opting to bring back OPS, the central government might feel increasing pressure to do the same or at least offer some kind of hybrid model that balances security for employees with sustainability for public finances.
Some experts believe a middle path could be the best solution. That might involve tweaking the NPS to include certain guarantees or creating a fallback safety mechanism to ease employees’ concerns. Any such move would aim to offer financial stability to retirees without putting an overwhelming burden on the exchequer.
What Should Employees Do Right Now?
For now, it’s a waiting game. If you’re a government employee, it’s important to stay informed and follow updates from your department and union. Employee associations play a key role in pushing these matters forward, so being involved can help your voice be heard.
Also, while the final decision rests with the government, individual financial planning remains important. It’s always wise to understand your options, monitor your pension contributions, and explore supplementary retirement savings if needed.
While there’s no official announcement from the central government yet, the conversation around the Old Pension Scheme is very much alive. With some states already on board and others seriously considering it, a bigger shift could be on the horizon. Whether it’s a full return to OPS or a new hybrid system, change seems likely—and it could be just around the corner.
