For decades, the Old Pension Scheme (OPS) was the foundation of retirement security for millions of government employees in India. Under OPS, retirees were promised a pension amounting to 50% of their last drawn basic pay — a stable and predictable income stream for life. However, after 2004, the government replaced OPS with the contribution-based National Pension System (NPS), citing unsustainable fiscal burden for the exchequer.
Now in 2025, as financial pressures mount for workers — rising cost of living, inflation, and economic uncertainties — thousands of government employees are again raising their voices. They demand the revival of OPS, arguing that NPS (and even the newly announced Unified Pension Scheme (UPS)) fail to offer the same security and dignity after retirement. This renewed demand has gained momentum across states and central cadres alike, sparking debates on fiscal sustainability, fairness, and employee welfare.
What Was OPS — And What Changed in 2004
Before 2004, the Old Pension Scheme was the standard for central and many state government employees. Under OPS: upon retirement, a government worker would receive a pension equal to 50% of their last drawn basic pay (plus dearness allowance, where applicable). There was no requirement of individual contribution; the pension liability was borne entirely by the government. This provided a fixed, predictable income for retirees and their families.
In 2004, the government introduced the NPS — a defined-contribution model — arguing that the old pension model was fiscally unsustainable. Under NPS, both the employee and employer contribute a portion of salary into a retirement fund; retirement benefits depend on the corpus accumulated and market returns, and not on last drawn salary. Over time, many employees began expressing concerns about uncertain pension amounts, market risks, and sometimes inadequate payouts.
The shift changed the retirement landscape permanently. For new recruits, guaranteed pension was replaced with a fund-based uncertain payout, ending an era of guaranteed security under OPS.
Why Employees Are Demanding OPS Back in 2025
In 2025, the demand for Old Pension Scheme revival has intensified. Several factors contribute to this wave:
- Economic Stress and Inflation: Inflation rates, rising cost of living, increasing expenses on education, housing, health — all make it harder for pensioners living on NPS-based retirement income. OPS offered stable, predictable pension which many feel is more suited to present economic conditions.
- Dissatisfaction with NPS / UPS: Many employees argue that NPS’s market-based returns are uncertain. Even the new UPS, introduced as a reform, fails to match the financial security and dignity that OPS once guaranteed.
- Widespread Support from Unions and Workers: Central and state government employee unions, retired pensioners’ groups, and even some active-duty staff have joined the call for OPS return. For them, pension isn’t just retirement benefit — it’s a matter of long-term stability and social dignity.
- State-level Precedents Provide Hope: A few states and regional governments have already begun restoring OPS (for certain employees) in 2024–25, creating a precedent and fueling demand across India. For many, this indicates that OPS revival is “possible” if political will exists.
Together, these factors have revived the debate — and for many employees, OPS is no longer nostalgia, but a realistic demand.
What Is the Government’s Current Stand: UPS Replaces OPS
Despite growing pressure, the central government’s position remains firm: OPS will not be restored for central government employees who fall under NPS coverage. Instead, on 24 August 2024, the cabinet approved the Unified Pension Scheme (UPS), to be rolled out from April 1, 2025.
Under UPS:
- It is a contributory pension scheme similar to NPS. Employees must contribute 10% of basic pay + dearness allowance. The government will contribute 18.5%.
- Pension payout will depend on contributions and returns, not guaranteed fixed pension equal to 50% of last drawn salary (as OPS offered).
- Government has made clear, through Parliamentary replies, that as of now there is no proposal under consideration to revert to OPS for central employees under NPS.
So officially, for central staff, OPS remains discontinued; NPS / UPS remains the path forward, while OPS demand is acknowledged only rhetorically.
What About States — Some Return to OPS
While the centre holds firm, several state governments have taken a different path. Given state-level financial autonomy, some states have restored OPS (fully or partially) for certain employees — especially those recruited before certain cut-off dates.
For example, in May 2025, Punjab Government issued a notification restoring OPS for nearly 2,500 employees whose posts were advertised before January 1, 2004 (despite them joining service later). This followed a High Court order and legal challenge by affected staff.
In other cases, like certain state universities or boards, OPS continues or is selectively revived — though often with riders and strict eligibility conditions.
These moves at state level provide hope to many central employees and pensioners — showing that revival is not unimaginable, even if the Centre resists.
What Employee Unions and Pensioners Are Saying
Unions representing central employees (such as Indian Railways Technical Supervisors’ Association — IRTSA) and pensioner rights groups have voiced strong criticism of UPS. They argue that UPS fails the most basic test of fairness: “equal pay for equal work.” According to them, UPS’s contributory model disadvantages many and creates inequalities in pension payouts.
They further claim that a fixed, guaranteed pension (like OPS) offers dignity, security and long-term stability — especially important in inflationary times. Many retired officers and government workers fear that their retirement life under NPS/UPS will be financially shaky, whereas OPS ensured a known pension.
On 23 November 2025, for instance, a large-scale agitation by government employees in Assam pressed for OPS restoration, indicating that the demand remains strong across states.
Why the Government Says OPS Return Is Unlikely for Centrals
The government’s main argument against reinstating OPS at the central level is fiscal unsustainability. Guaranteed pensions under OPS mean continual, open-ended liabilities for the exchequer — a burden seen as unsustainable, particularly with rising number of pensioners and increasing life-expectancy.
Furthermore, the rules under the Pension Fund Regulatory & Development Authority (PFRDA) do not allow a revert from NPS/UPS back to OPS for active central employees. So legally and financially, OMS revival for centrals is complicated.
The government argues that UPS strikes a balance — it continues pension benefits for employees while keeping the system contributory and economically manageable. Officials claim this ensures sustainability of pension payouts without overburdening national finances.
What Does This Mean for Current Employees and Pensioners?
For someone currently working under NPS or soon to retire under UPS, the odds of getting maximum benefits under OPS seem slim at the moment. Unless there is a major policy reversal — which appears unlikely — pension will continue in a contributory model.
However, for employees in certain state governments (or those recruited under special conditions), OPS continues to be a possibility. Those who fall under restored OPS rules may receive pension benefits under the old, more stable scheme.
Pensioners and soon-to-retire employees must also weigh: NPS/UPS pension depends on market returns and accumulated corpus — so appreciation for savings, inflation adjustment, and financial planning will be critical.
For unions and pensioner associations, the fight is far from over — they continue mobilizing public opinion, staging protests and raising the demand for OPS nationwide.
What Experts and Economists Say: The Trade-Off
Financial experts recognize the merit in both camps. On one hand, OPS offered certainty and stability — valued by employees and retirees. On the other, such defined-benefit pensions impose heavy, prolonged liabilities on government finances.
In a recent academic analysis, it’s pointed out that India’s aging population, rising life expectancy, and increasing number of retirees make a return to OPS at national level a severe challenge — unless the pension liability burden is managed via higher taxes or reduced spending elsewhere.
Some economists propose hybrid models — combining guaranteed pension benefits for certain categories, and contributory systems for others; or even offering a fixed base pension plus variable component based on corpus returns. That, they argue, could be a middle-way balancing pensioner security and fiscal responsibility.
At present, the government’s UPS appears to be its version of such a compromise — but for many employees and unions the compromise falls short.
Recent Developments (2025) That Keep the OPS Debate Alive
- In 2025, as central government moved to implement UPS for about 23 lakh employees under NPS, only a small fraction — roughly 1.35% — opted into UPS early, indicating widespread discontent with the new scheme.
- Several states — including those recently revising rules — have restored OPS for certain employees, signaling that the scheme remains politically and socially viable at sub-national level.
- Employee associations continue protests and agitations — demanding equality, pension security and reversal of NPS/UPS. Some have warned of “unrest” if demands are ignored.
- In Parliament and among bureaucratic leadership, the fiscal burden of OPS and legal constraints under PFRDA act remain major obstacles. As of mid-2025, government statements reaffirm there is no proposal under consideration for reviving OPS for central staff.
Thus, though demand is high and pressure mounting, reality remains complicated.
What Would a Nationwide Return to OPS Imply — Pros and Cons
Pros
- Guaranteed pension of 50% last drawn basic pay => retirement security and stability.
- Enhanced dignity for retirees; no dependency on market returns.
- Predictability helps long-term financial planning for retirees and their families.
- Boost to morale of government employees — salary + assured pension acts as retention and social security mechanism.
Cons / Challenges
- Huge financial burden on government exchequer — long-term unsustainable liability.
- With rising life expectancy and more retirees, pension payout costs will escalate each year.
- Could limit government’s ability to invest in infrastructure or welfare — as more budget gets tied to pension liabilities.
- Inequity between older OPS pensioners and new recruits (if OPS revived partially) — generations may receive vastly different pension benefits.
- Legal / regulatory hurdles under PFRDA & fiscal rules make national-level OPS revival complex.
Where Does the Debate Go from Here?
At this point, the future of OPS is uncertain but not dead. Key possibilities:
- Hybrid Pension Model — Government might propose a hybrid pension system: limited guaranteed pension + contributory benefits, offering middle ground.
- Selective OPS Revival (State-wise or cadre-wise) — As states like Punjab have already revived OPS for certain employees, similar moves may spread. Central government employees may continue under UPS/NPS, while state employees get OPS — creating a dual-track pension landscape.
- Political Pressure and Budgetary Reforms — Employee unions may push pension security in upcoming budgets; if political and social pressure rises, Centre may re-evaluate the financial model or find alternate funding methods.
- Continued Status Quo — Given fiscal burden and regulatory constraints, the government may adhere to UPS/NPS and reject full OPS revival — forcing employees to continue with contributory pension only.
Which path will emerge depends on political will, economic conditions, and public sentiment — especially as India heads toward new elections and debates over welfare, pensions, and public spending intensify.
Conclusion
The demand for revival of the Old Pension Scheme in 2025 reflects growing concern among government employees and pensioners about financial security in their post-retirement years. OPS once offered guaranteed, predictable pension, giving dignity and peace of mind. However, its fiscal burden forced its replacement with NPS, and now with UPS.
Despite new schemes, widespread dissatisfaction persists. Pensioners, active employees, and unions are pushing hard for OPS’s return or a similarly secure alternative. At the same time, economic realities, regulatory constraints, and budget pressures make a full-fledged, national-level return to OPS far from straightforward.
As the debate continues, what remains critical is a fair, sustainable solution — one that balances pensioner welfare with economic stability. Only time will tell whether OPS revival happens — or whether India will settle for reformed contributory models.