Before 2004, government employees in India were covered under the Old Pension Scheme (OPS). Under this, employees got a fixed pension after retirement. The pension was based on the last salary they received. Employees did not need to pay any money during service. The government alone had to provide and pay the pension.
The OPS also included cost-of-living benefits. Pension grew with time to balance inflation. This made OPS very secure and predictable for retirees. Many employees still like OPS because it gives a sense of safety and a sure income.
The Shift to NPS and UPS
In 2004, the government started a new system called the National Pension System (NPS). It was made for new central government employees. Unlike OPS, NPS requires both employee and employer to put a fixed share of salary into the fund.
The final pension depends on how much money is collected in the pension fund. It also depends on market returns. So, the pension is not fixed. It may increase or decrease.
Recently, the Unified Pension System (UPS) was added under NPS. Central government employees who joined service between 1 April 2025 and 31 August 2025 can choose UPS. UPS gives a little more security than NPS but is still not the same as OPS.
Main Features: OPS vs NPS vs UPS
| Feature | Old Pension Scheme (OPS) | National Pension System (NPS) | Unified Pension System (UPS) |
| Contribution | No contribution by employee | Contribution from both employee & employer | Contribution system like NPS |
| Pension Amount | Fixed, based on last salary | Depends on market and fund growth | More predictable than NPS but not fixed |
| Inflation Protection | Yes, with regular increases | Limited, depends on returns | Partial, offers some protection |
| Risk | No risk for employee | Risk due to market changes | Lower risk compared to NPS |
| Burden on Govt | High financial burden | Lower burden | Balanced burden |
Why Employees Want OPS Back
Government employees demand the return of OPS for many reasons. The main point is that OPS gives a guaranteed pension. This means they do not need to worry about market ups and downs.
Employees feel NPS and UPS create uncertainty. Market risk may affect their retirement income. OPS, on the other hand, protects them from inflation and rising costs.
Some states like Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have already brought OPS back for their employees. Others are considering it.
The Stand of the Central Government
The central government has not agreed to bring back OPS for all employees. It says OPS will put too much pressure on the treasury. Paying fixed pensions to lakhs of retirees is not easy for the economy.
The Centre wants to continue with NPS and UPS. It believes these are more sustainable in the long run. The government also wants to balance between giving secure pensions and keeping the budget stable.
The government has also said that death, invalidity, or disability benefits under NPS and UPS may be adjusted to provide more support to employees.
Challenges and Future Possibilities
Bringing OPS back at a national level may create huge financial problems. It will increase the government’s liabilities. This may affect money available for other public services.
Still, discussions are going on. Many state governments may bring back OPS or create hybrid models. Employees may get more choices in the future. Stronger protection under NPS and UPS is also possible.
This topic will remain important. Employees, unions, governments, and finance experts will continue to debate about pensions in India.
Conclusion
India’s pension debate is not over yet. OPS is safe but costly. NPS and UPS are affordable but risky for employees. The Centre wants a balanced approach, while states try their own policies. Employees still hope for a system that gives them both security and fairness.
Disclaimer
This article is for general knowledge only. It explains the difference between OPS, NPS, and UPS in simple words. It should not be taken as financial or legal advice. Pension rules may change from time to time, so always check the latest updates from the government or official sources before making decisions.