India has begun discussing its public policy debate again, with the old pension scheme (OPS) being a key topic on the block. With workers, unions and state governments vociferously on both sides of the issue, it’s now a hot-button topic that could play a role in charting the course on retirement benefits for public employees. OPS had been replaced by NPS in 2004, but fresh impetus and political pledges have brought back buzz around reintroducing the earlier format.
In this article, we are going to discuss what the Old Pension Scheme is all about, how it differs from the new one and state-level recent old pension schemes
What is the Old Pension Scheme (OPS)?
The Old Pension Scheme (OPS) of government employees is a defined benefit scheme where the benefits on retirement are “fixed”, “unchanged” and “guaranteed” by the government. The employee gets a lifelong pension under OPS, which is 50% of the last pay drawn as basic. After the death of an employee family pension is continued to his spouse.
This scheme guarantees the retirees’ financial future without any deductions from their income, since such pensions are fully financed by the State. Employee’s Contribution: No deductions are taken from the employee’s compensation for pension contribution – this is one of the few things that make OPS very attractive.
Why Did the Old Pension Scheme Get Substituted?
In 2004, the GOI (Government of India) replaced OPS with the National Pension System (NPS) for future employees joining after January 1st, 2004. The first was financial sustainability, OPS was becoming increasingly costly for government budgets because of the rising average life span and a growing number of retirees.
NPS has a defined contribution scheme wherein the employee and employer both contribute a certain percentage of their salaries each month to a retirement fund, which gets invested in market instruments. This then makes NPS a defined contribution fund, as opposed to the assured OPS.
But critics say NPS subjects employees to market risk and vagaries of pension payouts, unlike the Old Pension Scheme that provides lifelong benefits irrespective of how the stock market performs.
Joined Pension Scheme vs Old Pension Scheme
The central government recently introduced the Unified Pension Scheme (UPS) to break the divide between NPS and OPS. The debate between the unified pension scheme vs old pension scheme is very significant while understanding the pension reforms in India.
| Parameter | Old Pension Scheme (OPS) | Unified Pension Scheme (UPS) |
| Type | Defined Benefit | Hybrid (Defined Benefit + Contribution) |
| Contribution | Fully funded by government | Employee + Employer contribution |
| Market Risk | None | Partial |
| Pension Guarantee | 50% of last drawn salary | Minimum assured pension |
| Tax Benefits | Fully exempt | Limited exemptions |
The Unified Pension Scheme is an attempt to have the cake and eat it too — provide a minimum guaranteed pension AND fiscal responsibility. But the Old Pension System remains popular among several state governments and employee unions because of its simplicity and assured returns.
Old Pension Scheme News: The Present Situation
The old pension scheme made headlines in 2025, as many states reconsidered their position on retirement benefits. For example, states such as Punjab, Rajasthan, Chhattisgarh, and Himachal Pradesh announced their decision to revive OPS. States had strong demands and pressure to revive OPS.
However, the central government states that reviving OPS could increase the fiscal deficit substantially, but growing demands from the employees continue to make the Old Pension Scheme a sensitive political subject.
State-Wise Deployment: How Far Has Your State Progressed?
a. Punjab Old Pension Scheme
Punjab has formally brought back the Old Pension Scheme for its employees. Employee welfare and financial security were cited as the primary reasons by the state. The decision has been welcomed by trade unions but questions have been raised about longer-term fiscal consequences.
b. State of Old Pension Scheme UP (Uttar Pradesh)
Discussions surrounding the restoration of OPS in Uttar Pradesh have increased in intensity since other states switched to the OPS. Organizations representing employees in UP are calling on the government to institute OPS on the grounds that NPS created significant financial uncertainty. There is a review of the old pension scheme UP, but as yet, no decision has been made.
c. Old Pension Scheme Bihar
Bihar government’s employees have also publicly voiced their demand for reinstating OPS. Bihar issue and old pension scheme: Protests seeking the government’s attention are gradually growing in scale. The state has suggested it is prepared to reconsider, but fiscal affordability is a major question.
d. Old Pension Scheme Delhi
The Delhi Government has also spoken in favor of OPS and declared its decision to roll back for the eligible employees. The old pension scheme in Delhi is being reintroduced in a phased manner and the city government has demanded that the Centre give states freedom to follow a pension policy.
e. Old Pension Scheme of Rajasthan
One of the first states to announce making OPS mandatory was Rajasthan. The Chief Minister declared the decision in 2022, stating that it would be a step to ensure employee welfare. Thereafter, the old pension scheme of Rajasthan has been running very successfully for state employees. This should become an eye-opener for others.
f. West Bengal Old Pension Scheme
West Bengal has continued its Old Pension Scheme that predates 2004 and has never moved to NPS. The old pension scheme in West Bengal offers defined benefits to employees, thus making it a rare case in the Indian pension landscape.
Old Pension Scheme Supreme Court Order Issued Today
The Supreme Court on the old pension scheme today has thus created a lot of excitement among lakhs of central government employees. Multiple petitions have been filed, challenging the revival of OPS for those who joined after 2004 but whose recruitment process was initiated before that.
The Court has accepted that this is a complex issue and is considering the legal and fiscal consequences. There’s no final decision yet, but the early indication is that at least some members of the Court understand that a fair and balanced approach must be adopted in order to both respect the rights of workers while also protecting fiscal responsibility.*facts reiterated from earlier in this document.
Benefits of the Old Pension System
The increasing desire to bring OPS back isn’t unfounded. Here are some big benefits to recommend it:
- Life Annuity Certain – Retirees are paid a pension for life with no surprises.
- No Market Risks – Unlike NPS, pensions aren’t dependent on the market risk!
- Family Pension Benefits – Dependants continue to get benefits after the pensioner has passed on.
- Government Support – Fully government-sponsored pension, with full security.
- Simple Calculation – The pension calculation method is clear and simple.
These benefits have made the Old Pension Scheme quite a popular option for employees looking for financial stability in the long run.
Issues related to the Old Pension Scheme
OPS does have its advantages, but it also comes with limitations:
- Fiscal Cost: The scheme adds to the burden of government financial liabilities, particularly when life expectancy is increasing.
- Inter-Generational Equity: a means whereby future taxpayers, when offered, pay the pensions of present government workers.
- Sustainability concerns: It’s less sustainable in the long run, having been financed without employee contributions!
- Impediment to Development: More spending on pensions could mean less investment in infrastructure and welfare initiatives.
Weighing these concerns against each other will help you understand whether or not the Old Pension Scheme can be revived in a sustainable manner.
Also Read: Deloitte Internship 2025 | Railway Protection Force | Bandhkam Kamgar Yojana
Political and Economic Implications
There are not only financial reasons for the reintroduction of OPS but also political motives. It has been a vote-winning promise in several states, winning over huge numbers of government employees and pensioners.
But economists caution that a return to OPS could grow state deficits and strain budgets already strained by growing debt loads. But the social and moral commitment to safeguard the post-retirement life of employees is the one that keeps the argument on.
The Road Ahead: What Lies in the Future for OPS
The fate of the Old Pension Scheme is very much depends on the Supreme Court’s verdict as well as the fiscal practicality and political will. THERE are talks of the hybrid model like NPS-OFC, i.e., OPS and NPS, but it is not proposed to make a contribution by employees towards this.
As the Indian workforce grows and gets older, policymakers need to develop a pensions system that is safe, sustainable and fair. The best system would keep employees safe and preserve the nation’s long-term economic viability.
Conclusion
The Old Pension Scheme represents a promise — a promise of financial security and dignity in retirement following years of public service. Though the National Pension System introduced modern principles of finance, emotional and practical comfort of OPS is unmatched for many.
As Punjab, Rajasthan, Delhi and West Bengal, among others, lead the charge in reviving OPS, while states like UP and Bihar consider what to do next, our national conversation changes. The Supreme Court ruling on the old pension scheme today may pave the way for a new phase of India’s retirement policy.
Ultimately, the debate is not solely about economics at all – it is about making sure those who served their country can have peace and pride in retirement and financial freedom.
Also Read: 7 Nischay Yojna | Mangla Pashu Bima Yojana | Manav Garima Yojana
